REG - Fisher (James) - Preliminary results for the year ended 31 Dec 2023
16/04/2024 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20240416:nRSP7722Ka&default-theme=true
RNS Number : 7722K Fisher (James) & Sons plc 16 April 2024
James Fisher and Sons plc
Preliminary results for the year ended 31 December 2023
16 April 2024
James Fisher and Sons plc (FSJ.L) ('James Fisher', 'the Group'), the leading
marine service provider, announces its results for the year ended 31 December
2023.
Continued progress on deleveraging and turnaround plans
• Underlying results ahead of last year with underlying profit
growth across all three Divisions
• Transformation programme driven by the three themes of 'focus,
simplify and deliver' making good early progress
• New Executive Committee embedded, driving accountability for
financial and operational performance
• Made good progress on our 2023 priorities which focus on improving
safety, project management, employee engagement and financial performance
• Steps taken to strengthen the Group's financial position with the
agreed sale of RMSpumptools for £90m
Continuing operations Underlying results(1) Reported results
Year ended 31 December Year ended 31 December
2023 2022 2023 2022 Change
Change
Revenue (£m) 496.2 478.1 3.8% 496.2 478.1 3.8%
Operating profit/(loss) (£m) 29.6 26.4 12.1% (18.6) 24.7 n/m
Profit/(loss) before tax (£m) 8.3 16.2 (48.8)% (39.9) 14.5 n/m
Profit/(loss) for the year (£m) 2.3 11.5 (80.0)% (50.9) 9.0 n/m
Operating margin 6.0% 5.5% 50 bps (3.7%) 5.2% (890) bps
Return on capital employed 6.6% 5.3% 130 bps
Net debt - covenant basis 149.8 142.1 5.4%
Earnings/(loss) per share 11.4 22.3 (48.9)% (101.2) 17.4 n/m
Financial highlights
• Revenue up 3.8% to £496.2m driven by 9.9% revenue growth in the
Energy Division
• Underlying operating profit from continuing operations up 12.1%
with growth in all three Divisions
• 50 bps improvement in operating margin from continuing operations
• ROCE increased 130bps driven by underlying profitability and a
focus on capital discipline
• Investment in a new management team, strengthening the compliance
environment and commercial excellence to deliver efficiencies and improved
business performance has increased corporate costs from £5.9m in 2022 to
£10.9m
• Reported operating loss before tax of £39.9m reflecting goodwill
impairments of £28.0m (predominantly in the Defence division), restructuring
charges of £5.7m and refinancing costs of £12.2m
• Net debt (for covenant purposes) at £149.8m - net debt to EBITDA
at 2.75x
Strategic highlights
• Embedded our One James Fisher business model, with new Divisional
structures and Executive Team in place
• Rationalised our portfolio, divested JF Nuclear and closed Subtech
Europe
• Sale of RMSpumptools, announced in March 2024, will significantly
reduce debt and strengthen the Group's financial position bringing, enabling
us to move towards a Net Debt / EBITDA range of 1.0-1.5x; expected to complete
at the beginning of H2 2024
• Invested in compressors to support Bubble Curtain technologies in
expanding offshore wind constructions services
• Business Excellence embedded within the Group, delivering strong
results against the key company priorities
• Global talent development programme launched to leverage talent
acquisition and enhance career development
Jean Vernet, Chief Executive Officer, commented:
"We are now one year into our transformation programme to build a stronger,
more cohesive company. Despite a number of challenges early in the year, we
have made good initial progress in building our leadership team, implementing
our new operating model and deploying our focus and simplification agenda.
This includes significant progress to focus the Group's portfolio around our
core as an engineering services company, operating in the Blue Economy. We
have divested non-core businesses, and more recently, announced the sale of
RMSpumptools, which will significantly reduce our debt and create a stronger
financial foundation for growth.
I am proud of what we are achieving through Business Excellence. We are
driving a step change in our safety culture, delivering greater efficiency
through the deployment of Lean Six Sigma across our Product Lines, and we are
launching a Project Management Office to improve operational execution. These
initiatives will underpin our operational and financial performance and enable
our Divisions to deliver the very best service to our customers.
In the current financial year to date, the Group's overall performance has
been in line with the Boards's expectations, building on our early-stage
progress in 2023. Looking forward, we continue to see supportive end markets
in 2024 in the majority of our businesses and would also expect to deliver
further benefits from our turnaround initiatives."
For further information:
James Fisher & Sons plc Jean Vernet Chief Executive Officer 020 7614 9503
Karen Hayzen-Smith Chief Financial Officer
FTI Consulting Richard Mountain 0203 727 1340
Susanne Yule
1 The Group uses a number of alternative (non-Generally Accepted Accounting
Practice (non-GAAP)) performance measures (APMs) which are not defined within
IFRS. The APMs should be considered in addition to and not as a substitute for
or superior to the information presented in accordance with IFRS, as APMs may
not be directly comparable with similar measures used by other companies. The
APMs are described more fully and reconciled to GAAP performance measures in
Note 2 of the financial statements
2 Cautionary statement: This announcement contains certain forward-looking
statements with respect to the operations, performance and financial condition
of the Group. By their nature, these statements involve uncertainty since
future events and circumstances can cause results and developments to differ
materially from those anticipated. The forward-looking statements reflect
knowledge and information available at the date of preparation of this
announcement and James Fisher and Sons plc undertakes no obligation to update
these forward-looking statements. Nothing in this statement should be
construed as a profit forecast.
Chief Executive's statement
A year ago, we launched a transformation programme that would move James
Fisher from a portfolio of individual businesses to a stronger, more cohesive
company. This turnaround is expected to take between two to three years and be
driven by three themes: Focus, Simplify and Deliver.
To achieve focus, we have regrouped around our core as an engineering service
company operating in the Blue Economy.
To simplify the business, we have reorganised James Fisher around three
Divisions, aligned to the customer market verticals of Energy, Defence, and
Maritime Transport led by the new Executive Team. Each Divisional Head has
been given the responsibility to streamline reporting structures, standardise
processes and practices and share Group resources. Divisions are now divided
into Product Lines (PLs) and positioned as experts in their particular domain.
Our delivery is driven by a culture of accountability, with PLs in charge of
meeting their underlying operating profit (UOP) and return on capital employed
(ROCE) targets. Each business must earn its cost of capital, either by fixing
the business model if they currently underperform, or by accelerating
profitable growth if they are already above hurdle rates.
We established a Business Excellence Function and have driven standardisation
across the Group, deployed through the common language of Lean Six Sigma and
applied change management to deliver our 2023 priorities. These were to
improve our safety, forecasting (through the deployment of project
management), cash collection and employee engagement.
With much of this important work underway, it is clear that the Company has
growth potential, but our focus needs to remain centred on delivering against
our turnaround commitments.
One James Fisher
In 2023 we adopted the 'One James Fisher' model and brought together our
collective strength to achieve greater synergies for the business and its
customers. We are already achieving good traction, particularly within the
Energy Division across oil and gas, and offshore wind, as well as Defence and
Maritime Transport, which share common customers. Over time, the One James
Fisher model will also drive greater efficiency and effectiveness.
For over 175 years, James Fisher has been innovative and responsive to its
customers' needs. From coastal shipping, submarine rescue and saturation
diving, through to bubble curtains, the Company has been first to market with
innovative solutions. We recognise the importance of preserving our
entrepreneurial character.
At heart, we are an asset-light engineering service company that thrives by
bringing together innovative solutions that resolve complex problems. Our
strategic growth will be driven through the expertise of our people,
underpinned by applied technology, and amplified by expanding where the demand
is - across our geographic markets.
We are confident that fostering this new model, will enable us to:
· Leverage talent acquisition, career development, and knowledge
sharing to become the employer of choice
· Establish a new product development process that will enhance our
differentiation, with streamlined manufacturing and supply chain activities to
significantly enhance productivity
· Pool our mobile assets and field operators globally, in a service
delivery model, anywhere in the world
· Drive standardisation and automation, with the potential realised
through shared services
· Above all, prioritise our safety
Progress in a year of challenge
2023 was a mixed year, where we made good progress in building our leadership
team, implementing our new operating model, and deploying our focus and
simplification agenda. However, we faced some unexpected challenges that
impacted progress, both financial and operational, including the difficult
decision to close one of our non-core businesses.
As a service company, our people define us, and building a new Executive Team
has allowed us to lead the transformation with one voice. Our senior leaders
are the enablers of our Focus, Simplify and Deliver ambitions.
Focus
We divested non-core businesses and sold non-productive assets, which allowed
us to begin the process of reducing our indebtedness and concentrate
investments on our core portfolio.
To help align effort and resources across the organisation, we established
five universal objectives to guide activity, cut complexity and reduce
duplication.
We implemented a comprehensive upgrade of our health, safety, environment
standards. Our top priority remains Exceptional Safety, deployed through a
company-wide programme that adopts the highest standards from within our
industries. In 2023, despite missing our overall target, two of our Divisions
met their objectives and there has been a palpable, positive change with key
lessons learnt in the third.
Simplify
Through the creation of our three Divisions, the One James Fisher culture has
begun to embed. I am encouraged to see business units adopting similar
standards, as they work together to pool assets, share resources and engage
customers in a more co-ordinated way.
Our Investment Committee is a key control point and will provide discipline
and consistent decision-making in matters such as large customer tenders and
capital allocation.
Deliver
Led by our Business Excellence Function, all business owners were trained in
the Lean Six Sigma methodology in 2023 and we achieved 38 Green Belts and 8
Black Belts - good progress towards our 2024 objectives.
Through these collective efforts, we have made progress towards our strategic
target to deliver 10% UOP margin. We ended the year at 6.0% (2022: 5.5%).
Operational and market highlights
Energy
The Energy Division provides safe, sustainable products and services for two
core markets: oil and gas and renewables. In 2023, the Division increased
revenue c.10% to £266.5m with operating profit increasing by c.13% to
£15.7m. Highlights included:
· Strong performance from well testing, bubble curtain and artificial
lift products
· Expanded artificial lift products and service offerings from new
manufacturing base in Saudi Arabia
· Awarded UK 'Innovation in Decommissioning Award' for SEABASS plug and
abandonment solution
· Strong demand for our technologies, secured our first US contract for
bubble curtains
· Joint collaboration agreement signed for offshore wind operation and
maintenance (O&M) services in Japan to support Northeast Asia geographical
expansion
· Launch of James Fisher Academy to deliver skills and competency for
offshore wind services
Against the backdrop of heightening focus on energy security, demand for well
testing and production optimisation services remained strong, particularly in
the US, Middle East and Latin America. This was demonstrated through excellent
performance in the well testing and artificial lift Product Lines. By
contrast, the decommissioning market remained challenging, and the business
will focus more on selective bidding, aligned to margin delivery and stronger
operational performance. Renewable offshore wind market conditions improved
from 2022 to 2023 and the business returned to break-even through a
combination of selective bidding, technology differentiation and geographical
expansion. Offshore wind market conditions are expected to remain flat in 2024
but are set to improve in 2025 and the Division will focus its core strengths
on construction, operations and maintenance, data management and digital
solutions. This includes geographic expansion through key strategic
partnerships and collaborations.
Defence
The Defence Division provides underwater systems and life support capabilities
for the defence and commercial diving markets. In 2023, revenue increased by
6.3% to £72.5m, with the Division returning to profitability delivering
underlying operating profit of £1.5m. Highlights included:
· Successful transition of NATO submarine rescue system contract
· Initial trial of Shadow Seal special operations vehicle
· New General Manager appointed to drive US business market growth
· Early momentum in international markets, including services and
training contracts in India and South Korea
· Strong growth pipeline in Australia, Singapore, Sweden, the US and
Netherlands
· Further investment in new product development
As geopolitical and energy security trends continue, the demand for subsea and
special operations capabilities is set to increase. While the business
delivered effectively on its existing contract commitments, including
submarine rescue, some projects were delayed by customer and government
approvals. The Division continues to build a strong opportunity pipeline but
order intake was impacted by delays in the award of new contracts. However,
the commercial diving business has performed well, aligned to energy market
conditions. Product innovation and development is also set to drive further
growth, alongside the Shadow Seal special operations vehicle that was trialled
in 2023, ahead of its delivery to customers in 2024.
Maritime Transport
Maritime Transport is a leading the way in targeted coastal shipping and
global oil and natural gas ship-to-ship transfers. Although revenue declined
by 6% in 2023, to £157.2m, the Division was focused on profitability and
underlying operating profit was up c.23% to £23.3m. Highlights included:
· Delivery of two new, dual-fuel vessels, the Sir John Fisher and Lady
Maria Fisher
· Secured largest UK tankships contract renewal with Phillips 66
· Strong LNG STS demand globally coupled with strong demand for oil STS
in Brazil
The Division continues to play a key role in the critical supply of energy and
petrochemicals, alongside alternative fuels, including liquefied natural gas
(LNG). This resulted in a strong performance during the year, with high
utilisation levels across tankships, alongside a key contract extension with a
major UK customer. As part of the Company's fleet replacement programme, James
Fisher took delivery of two new, dual-fuel vessels, which will underpin the
company's ESG commitments. The STS business maintained its global market
leading position in STS transfers and performed well in the first half of the
year, particularly in Brazil. There is continued opportunity to integrate the
business further and identify synergies from which to grow the customer base.
Lessons learned and strengthening our platform
Despite the potential in the business and the significant changes we have
accomplished, the Group continued to face challenges in 2023. This included
the complex divestiture of our nuclear business, which impacted the
refinancing of our bank debt during the first quarter. Whilst this was the
right strategic decision, it had a significant short-term impact on James
Fisher in terms of resources, distraction, and costs.
These challenges led us to implement a more robust risk management and
governance framework, delivered through a strengthened Legal Function with
expert talent integrated across Group and Divisions. Our Functions are
improving in both Finance and Human Resources (HR), and we are taking steps to
integrate our business systems. Therefore, we are still in the
"back-to-basics" phase of our journey in these two areas.
With the arrival of Karen Hayzen-Smith as our new Chief Financial Officer, I
look forward to an accelerated strengthening of the team, and the upgrade of
our control and risk management processes. This is a pre-requisite to the
Company delivering on its strategic objectives.
In HR, we appointed experienced Business Partners in each Division and
established clear Functional oversight. We implemented a more systematic
performance review and succession planning process, and launched recruitment
and development initiatives, such as the James Fisher Academy. We see the
Academy as an engine to increase the expertise of our customer facing service
colleagues and to reduce our dependence on third-party contractors.
In a period of considerable change, our employee engagement score remained
level with last year (3.86 vs. 3.84 in 2022), falling short of our ambitions.
Our people are integral to the services we provide, and this makes employee
engagement an extremely important indicator for us. Nevertheless, there was
progress in some Divisions, which showed the positive impact of our culture
initiative.
Completing our foundation work
As the new organisation has settled in, our immediate priority is to ensure we
have a strong financial base and get closer to our mid-term leverage targets
of 1.0-1.5x Net Debt to EBITDA. This will provide a sustainable platform to
deliver growth.
We will continue to build on the change management journey started in 2023,
through several programmes:
1. Exceptional Safety: is our number one priority. We will expand our
approach into the supply chain and sub-contractors, building a collective
culture across the full workforce
2. Employee Engagement: improve two-way engagement with employees so we can
inform, equip and empower them to deliver our Company's full potential
3. Foundations for Growth: continue to strengthen our financial, governance
and risk management foundations. Reinforce UOP and ROCE as the North Star to
achieve financial improvement and build a more resilient business for the
future
4. Pipeline of Talent: attract, develop and inspire our employees to reach
their full potential in a diverse and inclusive environment. At the heart of
this is our five-year talent development framework
5. Strong Supply Chain: work with employees, contractors and partners to build
a stronger supply chain framework. This is centred around efficient
execution and delivery, including the pooling of both assets and people
These priorities will underpin our customer focus, as we continue to prepare
for the long-term strategic growth of James Fisher.
Positioning for growth
Against the backdrop of continued geopolitical instability and security of
energy supply, all three Divisions should benefit from long term, structural
demand tailwinds.
The Energy Division will support the energy transition through its innovative
offshore wind solutions and help oil and gas customers to become more
efficient and less carbon intensive.
Our Defence Division will continue to lead the industry in life support and
lifesaving products and services, which includes innovative platforms to
bridge defence gaps through close collaboration with our partner nations.
In Maritime Transport, we will ensure continuity of critical supply through
coastal shipping both in the UK and in new geographical markets, and explore
adjacent markets relevant to our capabilities. We will explore options in
other regions, such as the Caribbean, where we have proven value. In
ship-to-ship activities, we will lead in serving liquefied natural gas (LNG)
demand, while providing world-class safety, reliability and compliance in
crude oil.
Across all these verticals, James Fisher will be next to our customers,
wherever they are - across the North Sea, the Middle East, Asia Pacific and
the Americas.
Having hired our Chief Technology Officer, in January 2024, we will harness
the innovation that I have witnessed across the Group and will embed
technology as a major part of our growth plan. This includes a new product and
service development process, that will accelerate the introduction of new
offerings to market.
As we reduce our financial leverage, we will look to enrich our service
offerings by adding differentiated activities to our divisional portfolio,
either organically or through acquisitions. Any future acquisition must
demonstrate some compelling contribution to our strategic goals and continue
to be asset-light.
Outlook for the year ended 31 December 2024
In the current financial year to date, the Group's overall performance has
been in line with the Boards's expectations, building on our early-stage
progress in 2023. Looking forward, we continue to see supportive end markets
in 2024 in the majority of our businesses and would also expect to deliver
further benefits from our turnaround initiatives.
Our key focus for 2024 is to establish a robust and sustainable financial
platform, with lower levels of debt as we work towards a mid-term leverage
range of 1.0-1.5x (Net Debt to EBITDA). To achieve this we need to complete
the disposal of non-core assets during 2024 and refinance our debt facilities
which mature in March 2025. Delivering on this objective will strengthen our
balance sheet, reduce our interest cost, make us a more resilient Group and
provide greater ability to take advantage of growth opportunities.
Thanks
As I reflect on this year of transformation, I would like to thank the Board,
shareholders, customers, and employees for their continued support through
this time of change.
As we head into 2024, I am proud of the progress we have made in our journey
of transformation with a recognition there is much more to be done. With a
stronger platform for growth, I am confident that James Fisher will once again
prosper thanks to the people and innovation that is the hallmark of this
organisation.
Jean Vernet
Chief Executive Officer
A summary of the Group's performance from continuing operations is set out
below.
Continuing operations Underlying results(1) Reported results
Year ended 31 December Year ended 31 December
2023 2022 2023 2022 Change
Change
Revenue (£m) 496.2 478.1 3.8% 496.2 478.1 3.8%
Operating profit/(loss) (£m) 29.6 26.4 12.1% (18.6) 24.7 n/m
Profit/(loss) before tax (£m) 8.3 16.2 (48.8)% (39.9) 14.5 n/m
Profit/(loss) for the year (£m) 2.3 11.5 (80.0)% (50.9) 9.0 n/m
Operating margin 6.0% 5.5% 50 bps (3.7%) 5.2% (890) bps
Return on capital employed 6.6% 5.3% 130 bps
Net debt - covenant basis 149.8 142.1 5.4%
Earnings/(loss) per share 11.4 22.3 (48.9)% (101.2) 17.4 n/m
(1) The Group uses a number of alternative (non-Generally Accepted Accounting
Practice (non-GAAP)) performance measures (APMs) which are not defined within
IFRS. The APMs should be considered in addition to and not as a substitute for
or superior to the information presented in accordance with IFRS, as APMs may
not be directly comparable with similar measures used by other companies. The
APMs are described more fully and reconciled to GAAP performance measures in
Note 2 of the financial statements.
Reported results from continuing operations
The Group generated revenue of £496.2m in 2023, an increase of 3.8% compared
to £478.1m in 2022. The Energy and Defence Divisions showed growth against
2022, with Energy up 9.9% (2023: £266.5m; 2022: £242.6m) and Defence up 6.3%
(2023: £72.5m; 2022: £68.2m). Maritime Transport revenue was down by 6.0%
(2023: £157.2m; 2022: £167.3m) driven by a proactive decision to exit some
lower margin contracts.
Gross margin was 27.4% similar to the 26.6% achieved in 2022.
The Group made an operating loss of £18.6m in 2023, an adverse movement of
£43.3m compared to the £24.7m operating profit in 2022, reflecting net
adjusting items of £48.2m (2022: £1.7m), offset by stronger underlying
business performance. The adjusting items include an impairment of goodwill of
£28.0m which is discussed below.
Loss before tax was £39.9m (2022: £14.5m profit). The decrease in profit
before tax was driven by the statutory operating profit performance described
above as well as a £11.1m increase in net finance expense. The increase in
net finance expense was the result of increased interest rates and higher
amortisation of financing fees arising from the refinancing undertaken in
2023, together with an estimate of deferred fees that would arise on exiting
the facility. There was also an increase due to unwinding of discount on
lease liabilities due to the Group entering into and extending a number of
vessel and office leases in the year.
Loss per share from continuing activities was 101.2 pence compared to 17.4
pence earnings in 2022, reflecting the reduced operating profit performance
and increased adjusted items.
Underlying operating results from continuing operations
Reconciliation of underlying operating profit to operating profit (continuing) Year ended 31 December
2023 2022
£m £m
Underlying operating profit (continuing) 29.6 26.4
Amortisation of acquired intangible assets (1.1) (2.1)
Impairment charges (28.1) (0.7)
Refinancing costs (12.2) -
Specific trade receivables provision - 1.1
Restructuring costs (5.7) (1.7)
Disposal of businesses and assets 1.7 3.4
Other (2.8) (1.7)
Operating profit (continuing) (18.6) 24.7
Underlying operating profit improved by 12.1% to £29.6m (2022: £26.4m). Each
Division delivered growth in both underlying operating profit and margin. The
Group's overall underlying operating profit margin improved by 50bps, from
5.5% in 2022 to 6.0% in 2023 even though the improved trading performance was
delivered alongside the necessary investments the Group has made in strategic
initiatives, including the establishment of the Business Excellence workstream
and projects to strengthen internal controls and hiring for key senior
management roles. Included in the underlying operating profit are £3.8m of
losses generated by Subtech Europe, whose operations ceased in December 2023.
The adjusting items for 2023 amounted to £48.2m, with the largest adjustments
related to £28.1m impairment charges and reversals, largely on goodwill
balances, £12.2m costs associated with the new RCF and £5.7m restructuring
costs. Of the goodwill impairment charge, £25.0m was recognised in relation
to the Defence Division. Whilst the Division's performance improved in
comparison to 2022, its contract win rate was not as strong as expected due to
delays in customer procurement processes. In arriving at the value of goodwill
impairment, we built in the risks associated with the potential delays and
cancellations of future projects into cash forecasts. This, combined with a
higher discount rate, led to the recognition of the impairment. However, the
Division retains a solid pipeline, and a positive outlook for the business
over the medium-term remains unchanged.
Summary of underlying operating results from continuing operations
Revenue (continuing) Year ended 31 December
2023 2022 Change %
£m £m
Energy 266.5 242.6 9.9
Defence 72.5 68.2 6.3
Maritime Transport 157.2 167.3 (6.0)
Revenue (continuing) 496.2 478.1 3.8
Year ended 31 December
Underlying operating profit/(loss) (continuing)
2023 2022 Change%
£m £m
Energy 15.7 13.9 12.9
Defence 1.5 (0.4) n/m
Maritime Transport 23.3 18.8 23.9
Corporate (10.9) (5.9) (84.7)
Underlying operating profit 29.6 26.4 12.1
Full year operating performance by Division
As announced in April 2023, effective from 1 January 2023 the Group has
reorganised into three divisions, representing the key markets within which
the Group operates, namely Energy, Defence, and Maritime Transport. The Energy
Division combines the Divisions that used to be called Marine Support and
Offshore Oil, without Fendercare, which is added to the Tankships Division to
create Maritime Transport. JFD is the only component of the Defence Division
and was previously reported in the Specialist Technical Division.
Energy
Robust performance with strong demand in Well Testing and Bubble Curtain and
Artificial Lift
The Energy Division provides products and services to the offshore wind and
oil and gas markets, and mainly comprises of the Well Testing and Bubble
Curtain (Scantech), Artificial Lift (RMSpumptools), Inspection Repair and
Maintenance (JF Subtech), Offshore Wind (JF Renewables) and JF Decommissioning
product lines.
Year ended 31 December
2023 2022 % change
£m £m
Total revenue 266.5 242.6 9.9%
Underlying operating profit (£m) 15.7 13.9 12.9%
Underlying operating profit margin 5.9% 5.7% 20 bps
Return on capital employed(1) 9.3% 8.0% 130 bps
The Energy Division delivered revenue growth of 9.9%, from £242.6m in 2022 to
£266.5m, with good performances across the majority of the product lines.
Revenue growth is 17% if adjusted for disposed business in 2022. Well Testing,
Bubble Curtain and Artificial Lift, in particular, achieved strong growth with
the supportive demand conditions. Underlying operating profit growth for the
Division was 12.9%, which included a £3.8m loss generated by Subtech Europe,
whose operations ceased in December 2023. Subtech Europe had been incurring
losses over a number of years due to increased competition and a North Sea
market that was both seasonal and required the supply of a vessel and services
on a demand basis. This gave rise to a higher risk model and periods of lower
utilisation which generated losses.
Well Testing and Bubble Curtain revenue, which includes solutions in Taiwan
and USA, increased by 26.8% to £58.2m (2022: £45.9m). This increase was
driven by sustained demand for well-testing services, with a strong market
backdrop and quick deployment of the Group's new fleet of more efficient air
compressors onto bubble curtain projects on the US East Coast.
Artificial Lift product sales increased by 27.2% to £42.5m (2022: £33.4m), a
new record high, continuing the strong market trend seen in the first half of
2023. In March 2024, the Group announced the conditional sale of RMSpumptools
for an enterprise value of £90m (expected net proceeds of £83m), with the
business set to exit the division at completion during the second half of
2024.
Inspection, Repair and Maintenance showed strong revenue growth, from £98.8m
in 2022 to £107.6m, with growth in the Brazil and Middle East markets. The
business performed well in the Middle East due to strong utilisation and day
rates earned from Swordfish, which was leased back after it was sold in
January 2023. The lease has now finished, and the vessel returned to the
owner. However, the business experienced operating losses in South Africa and
in Europe, which led to the decision to close Subtech Europe.
Offshore Wind delivered strong revenue growth of £29.5m over a weak
comparative period (2022: £15.7m) and achieved a near break-even position
compared to an operating loss in 2022. The market was up from 2023 to 2022 and
is forecasted to be relatively flat in 2024. The Group continues to believe
that its strong offerings of products and services into this market will
deliver profitable growth in the future.
Continuing volatility in the market led to our Decommissioning business having
a disappointing year, with a decrease in revenue of 18.7% to £22.2m (2022:
£27.3m). The decommissioning markets remain challenging with the business
experiencing volatility in demand during 2023. The business has a new
management team in place who are focused on new contract wins, strong project
management and margin delivery. The medium-term market growth drivers for this
business remain attractive.
Defence
Contract delays impacted performance - solid growing revenue pipeline
The Defence Division provides underwater systems and life support
capabilities, for the defence and commercial diving markets. The main
capabilities are submarine rescue, defence diving, special operations
vehicles, submarine systems, and commercial diving and hyperbaric systems.
Year ended 31 December
2023 2022 % change
£m £m
72.5 68.2 6.3
Total revenue
Underlying operating profit/(loss) (£m) 1.5 (0.4) n/m
Underlying operating profit margin 2.1% (0.6)% 270 bps
Return on capital employed(1) 2.1% (0.4)% 250 bps
The Defence Division delivered revenue growth of 6.3%, increasing from £68.2m
to £72.5m in 2023, and reversed a prior year underlying operating loss of
£0.4m to deliver an underlying operating profit of £1.5m. This increased
revenue was predominately due to delivery of additional services to existing
defence customers and a strong performance for our commercial diving and
hyperbaric systems, linked to a recovery in the energy sector. This is
consistent with higher levels of activity seen in the Energy Division's diving
activities.
Activity in the period focused on service and training contracts in India and
South Korea with good progress, and the renewed NATO submarine rescue contract
secured at the end of 2022, which went live in July 2023. Some projects were
negatively impacted by client dependencies and government approvals that were
outside our control, which led to increased cost and schedule impacts. We
anticipate completing these projects in 2024, within our revised cost
estimates.
Overall, while the defence market is buoyant and JFD's performance improved in
comparison to 2022, the Division did not secure some of the projects that were
anticipated in 2023, due to delays in government procurement processes. The
Division is focused on securing new contract wins and converting its
significant sales pipeline in 2024, as customers around the world are
prioritising undersea defence and energy security. While the defence market
has inherently long and often uncertain procurement timelines, the
geo-political environment is leading to a change in customer behaviour, with
more urgency being placed on procurement of critical undersea capabilities. We
are investing in our long-term growth through an established new product
development portfolio, which will bring some exciting next generation products
to market. The forward order book on 31 December 2023 for the Division was
£223m.
Maritime Transport
Solid performance focused on margin improvement and portfolio
rationalisation
The Maritime Transport Division comprises the Tankship business, Cattedown
Wharves, JF Fendercare and Martek Marine.
Year ended 31 December
2023 2022 % change
£m £m
Revenue
JF Tankships (incl. Cattedown) 76.1 78.9 (3.5)
JF Fendercare (incl. Martek) 81.1 88.4 (8.3)
Total revenue 157.2 167.3 (6.0)
Underlying operating profit (£m) 23.3 18.8 23.9%
Underlying operating profit margin 14.8% 11.2% 360 bps
Return on capital employed(1) 30.3% 22.5% 780 bps
The Tankships business delivered a robust performance in the year. Revenue
was marginally down year-on-year, from £78.9m to £76.1m, in part due to a
reduction in fuel costs, which on certain contracts are passed to the
charterer, but also due to the proactive decision to exit some lower margin
contracts. However, margins were stronger due to the improved contract rates
and the spot market rates averaging higher than in 2022. The tanker fleet
utilisation during the year was 93% (2022: 88%). This was partially offset by
revenue increase in Cattedown Wharves as a result of inflationary increase in
quay dues across the port and increases in number of vessels through the port
year-on-year.
Fleet improvements continued, with the Lady Maria Fisher joining the fleet
during the period and the Mersey Fisher, which had reached the end of its
commercial life, being sold. Tankships commenced the rebuild programme for its
new fleet with contracts signed for four new vessels with delivery of all four
vessels within 2026.
JF Fendercare experienced a £7.3m reduction in revenue year-on-year, but its
operating profit saw a significant increase. The revenue shortfall was mainly
as a result of the decision to exit Tanjung Pelepas, which is a port in
Malaysia, which had minimal impact on profitability as margins were low.
Fendercare experienced strong demand in Brazil on ship-to-ship transfers,
which attract higher gross profit margins, thereby increasing profitability
overall. Europe and Africa experienced a drop in transfers as a result of
higher stock levels reducing demand. A fourth LNG STS kit was purchased in the
period, as at the end of 2023 we have two LNG retainers in place. Martek's
revenue was up from 2022, however, the change in product mix meant that the
operating margins slightly deteriorated.
Corporate
Corporate costs were £10.9m compared to £5.9m in 2022. The increase reflects
the necessary investment the Group has made in the business transformation
programme, including the new executive and senior management team,
strengthening of controls and compliance environment, roll out of lean,
business and commercial excellence and other activities. Combined, these
activities are focused on building a foundation for growth through stronger
business performance and efficiencies leading to margin improvement.
Discontinued operations
In the period through to its disposal on 6 March 2023 for a nominal
consideration of £3, the nuclear decommissioning business (JFN) generated
revenue of £6.7m (2022: £42.8m) and a loss after tax of £11.4m (2022:
£19.8m). Subsequent to the sale of the business, on 9 August 2023, the Group
was notified that JFN had appointed administrators and is in the process of
being liquidated. The Group is engaged with the administrators and certain key
customers of JFN that held parent company guarantees with the intention of
mitigating potential claims against the Group that may arise from the JFN
administration. A provision of £6.4m has been included in the results for the
year ended 31 December 2023, in relation to potential claims/settlements under
parent company guarantees.
Items outside underlying operating profit
The Group has recognised a net operating loss of £48.2m in relation to
adjusting items, significantly increased from £1.7m in 2022.
Year ended 31 December
2023 2022
£m £m
Impairment charges, net 28.1 0.7
Refinancing costs 12.2 -
Restructuring costs 5.7 1.7
Amortisation of acquired intangible assets 1.1 2.1
Specific trade receivables provision release - (1.1)
Gain on disposal of businesses and assets (1.7) (3.4)
Other 2.8 1.7
Total 48.2 1.7
The £28.1m net impairment charge in 2023 relates to goodwill impairment
charges of £28.0m, largely in the Defence Division and further vessel and
assets impairments of £2.4m in Maritime Transport and Energy Divisions,
partially offset by a £2.2m impairment reversal for impairments recognised in
previous years. The 2022 impairment charge of £0.7m mainly comprises a
reversal of impairment to Swordfish dive support vessel and a non-cash
goodwill impairment charge in relation to a business in Energy Division.
During 2023, the Group incurred £12.2m legal and advisory costs relating to
the new revolving credit facility (RCF), refinancing strategy, obtaining a
waiver from the Group's lenders and completion of various requirements and
conditions of the RCF.
Restructuring costs of £5.7m in 2023 relate to the transformation programme
aimed at simplification, rationalisation and integration of the Group's
businesses. This also includes £3.0m of costs associated with Subtech Europe
closure. In 2022, people and property costs of £1.7m were incurred for
restructuring programme within the Fendercare and JFD businesses.
Amortisation of acquired intangibles relate to customer relationships acquired
through business combinations which are amortised over their estimated useful
economic life.
£1.1m of debts previously provided for were collected during 2022 and we
continue to pursue other amounts, for which provisions have been made, through
legal and commercial discussions
Disposal of businesses and assets in 2023 largely relates to a gain of £1.4m
on disposal of a vessel in the Maritime Transport Division. In 2022, the Group
sold three businesses and one tanker for profits on sale of £2.5m and £0.9m,
respectively.
Other includes £2.2m past service cost recognised for the MNRPF scheme in
respect of past administrative and benefit practices). In 2022, the Group also
recognised a £1.5m charge in relation to its share (approximately 2%) of the
obligations under a defined benefit pension fund, following a settlement in
relation to benefits payable by the scheme to past members.
The tax charge relating to non-underlying items is £5.0m which includes a
charge of £4.7m in relation to de-recognition of the brought forward UK
deferred tax.
Capital expenditure
Capital expenditure in the year was £28.5m and £1.7m on development
expenditure. Capital expenditure to depreciation ratio was 1.3 (excluding
intangibles additions and amortisation). The majority of growth expenditure
was in the Energy Division including spend on a new fleet of compressors to
support expansion in the "bubble curtain" product line.
Finance charges
The Group's net finance charges increased by £11.1m to £21.3m (2022:
£10.2m).
Finance charges in 2023 primarily comprise £15.8m of interest expense on
loans and overdrafts (2022: £7.4m), £2.7m for deferred financing fees to be
paid under the terms of the new credit facilities (2022: £nil), £1.7m of
loan arrangement fees (2022: £1.0m), including the write-off of previously
capitalised loan arrangement fees relating to the former credit facilities and
£4.0m interest expense on lease liabilities (2022: £2.2m), partially offset
by £3.2m (2022: £0.7m) interest income on cash balances and pensions.
The increase in interest expense on loans and overdrafts and interest income
on cash balances was largely the result of higher interest rates. Interest
expense on lease liabilities increased during the year mainly due to new
vessel leases and extensions made to existing vessel and property leases.
The Group's interest cover ratio, an alternative performance measure which is
fully described and reconciled in Note 2 of the financial statements, and is
calculated by dividing underlying operating profit by net finance charges
(excluding IFRS 16 finance charges), is 2.2 times (2022: 3.5 times), which
compares to banking covenants that require the ratio to be greater than 1.75
times (2022: 3.0 times).
Taxation
The Group has recognised an overall net tax expense in respect of continuing
operations of £11.0m in the year (2022: £5.5m). The increase in tax expense
is primarily driven by the de-recognition of the deferred tax asset. The tax
expense on underlying profits from continuing operations for the year is
£2.4m (2022: £4.7m) representing an underlying effective tax rate of 29.0%
(2022: 28.4%), which has been adjusted for £3.6m deferred tax impacts on
finance charges.
Given the volume of the cumulative UK tax losses, which were mostly generated
by the discontinued businesses and exceptional costs, it was decided not to
recognise the UK deferred tax asset in respect of the UK losses incurred in
the year and £4.7m brought forward losses. The Group still has the ability to
recognise these losses in future periods against chargeable profits.
Dividends and earnings per share
The Board has not recommended dividends in 2023 or 2022, given the overall
financial position of the Group. The Board remains committed to reintroducing
a sustainable dividend policy at the right time.
Basic loss per share, on a statutory basis, increased to 123.9 pence (2022:
22.1 pence) reflecting lower profit after tax. Underlying earnings per share
decreased to 11.4 pence (2022: 22.3 pence) primarily due to higher interest
and tax charges in the year, partially offset by an improvement in the
underlying operating profit.
Cash flow and borrowings
2023 2022
£m £m
Cash flow from operating activities 37.8 44.5
Cash flows (used in)/from investing activities (4.7) (15.8)
Cash flows used in financing activities (27.4) (40.1)
Net increase in cash and cash equivalents 5.7 (11.4)
Cash and cash equivalents at 1 January 22.8 34.5
Net foreign exchange differences (1.7) 2.5
Cash transferred to asset held for sale (0.4) (2.8)
Cash and cash equivalents at 31 December 26.4 22.8
The Group generated £37.8m (2022: £44.5m) cash from operating activities,
with a working capital inflow of £6.7m (2022: £2.6m working capital
outflow). The increase in the loss for the year was the key driver for the
reduction. The working capital inflow arose due to a reduction in debtor days,
partially offset by a reduction in creditor days. In 2022, the Group also
built inventory to satisfy the higher demand for its product which was not
repeated in the current year. Debtor balances continued to show some positive
progress during the year due to the business focus on collections. Creditor
balances have also reduced as the Group rebalanced its working capital
throughout the year. Tax payments were slightly higher than last year at
£8.6m (2022: £8.1m).
Cash flows used in investing activities during the year were £4.7m (2022:
£15.8m). Capital expenditure, at £29.4m, was lower than the £31.7m in 2022.
Key expenditure in 2023 included investment in energy efficient compressors
for Scantech product line in the Energy Division, which is expected to yield
attractive returns. Other capex investments included dry docking of the
Group's vessels and equipment purchases. The Group generated £25.6m in asset
disposals (2022: £2.2m) mainly consisting of the proceeds from the sale of
Swordfish Dive Support Vessel as well as other vessels and tugs in the Energy
and Maritime Transport Divisions. The Group also incurred costs of £3.2m in
2023 from the sale of JFN.
The Group's net borrowings at 31 December 2023, including all lease
liabilities, was £201.1m, a £15.3m increase in borrowings from 31 December
2022. Bank borrowings increased by £8.2m and additional lease liabilities
increased by £8.3m following the delivery of Lady Maria Fisher tanker into
our fleet and extensions of other vessel and property leases.
On 31 December 2023, the Group had £192.7m of committed credit facilities
(2022: £247.5m) and £24.7m of undrawn committed credit facilities (2022:
£88.0m).
The Group's net debt for the purposes of its banking covenants consists of net
bank borrowings, finance lease liabilities (on an IAS 17 basis), and bonds and
guarantees, as summarised below.
2023 2022
£m £m
Net borrowings 201.1 185.8
Less: right-of-use operating leases (56.9) (46.0)
Add: bonds and guarantees 5.6 2.3
Net debt - covenant basis 149.8 142.1
Underlying operating profit 29.6 26.4
Depreciation and amortisation 41.2 40.3
Less: Depreciation on right-of-use assets (16.3) (12.2)
Less: Amortisation of acquired intangibles (1.1) (2.1)
IFRS 16 impact removed 1.0 0.2
Covenant EBITDA 54.4 52.6
Net debt : EBITDA(1) 2.75 2.70
(1)Defined as leverage APM in note 2.3.
On a covenant basis, net debt has increased by £7.7m in the period. The ratio
of net debt: EBITDA (defined as leverage APM, which is explained and
reconciled in Note 2 of the financial statements) has increased slightly to
2.75 times (2022: 2.70 times), which compares to banking covenants requiring
the ratio to be less than 3.25 times.
Liquidity
In June 2023, the Group agreed new borrowing facilities with its lending banks
of £209.9m, with a maturity date of March 2025. As at 31 December 2023,
agreed amortisation had reduced the available facility amount to £192.7m. The
continued access to liquidity has been included as a Group Principal Risk in
the Annual Report and Accounts due to the relatively short-term nature of the
new facilities.
With the current RCF maturing early next year, the Group will be refinancing
its debt in 2024. We are underway with the deleveraging of our balance sheet
with the agreement for sale of the entire issued share capital of RMSpumptools
Limited (RMS) announced in March 2024, which is expected to bring in net
proceeds of £83m. The disposal is expected to complete early in H2 2024,
subject to certain conditions. Deleveraging will provide the Group with
greater business resilience and greater headroom on its existing facilities,
while reducing the Group's debt levels towards our mid-term target net debt /
EBITDA range of 1.0-1.5x. In turn this should enhance the Group's ability to
execute a successful refinancing, and put in place new facilities during 2024
that provide the liquidity to support investment in growth whilst also being
on more favourable terms than the current facility.
Balance sheet
The Group's net assets decreased by £69.7m in the year to £148.6m (2022:
£218.3m). The loss for the year of £62.3m was increased by other
comprehensive losses of £8.4m in relation to foreign exchange movements and
hedging of £9.7m, net of tax, and an actuarial gain from the Group's defined
benefit pension fund of £1.3m in the year, net of tax.
Non-current assets
Non-current assets decreased by £25.9m in the year from £321.2m to £295.3m.
Goodwill reduced by £38.0m to £78.3m (31 December 2022: £116.3m) as a
result of impairment charges of £28.0m, a reclassification to held-for-sale
assets of £7.6m and foreign exchange differences of £2.4m. Other intangible
assets reduced to £6.3m from £8.2m, largely due to additions and transfers
of £2.8m, which was offset by amortisation and impairment charges of £4.8m.
Within property, plant and equipment, the Group invested £28.5m in additions.
These additions were offset by disposals with a net book value of £2.6m,
depreciation of £22.0m, reclassifications to intangible assets and assets
held for sale of £3.1m, a small impairment charge of £0.5m and foreign
exchange differences of £2.0m.
Right-of-use assets increased by £15.1m, due to the additions of £32.8m
relating to the delivery of Lady Maria Fisher tanker into our fleet and
extensions on other vessel and property leases as well as a reversal of
impairment of £1.9m previously recorded on vessels in the Energy Division,
which were partially offset by depreciation of £16.3m, disposals with a net
book value of £2.0m, reclassifications to held for sale assets of £0.7m and
foreign exchange differences of £0.6m.
The Group has recognised a £7.4m asset in relation to the Group's Shore Staff
defined benefit pension scheme in accordance with IFRIC14 following movements
in actuarial assumptions. The Group continues to make deficit repair payments
in line with agreed profiles with £1.5m expected to be paid in contributions
in 2024 following the most recent triennial actuarial valuation.
Current assets and current liabilities
The Group's net current assets increased by £12.9m from £61.3m at 31
December 2022 to £74.2m at 31 December 2023. This increase arose from the
£37.8m reduction in current liabilities in 2023 to £188.7m, which was
partially offset by a £24.9m reduction in current assets in 2023 to £262.9m.
The £24.9m decrease in current assets in 2023 was mainly driven by a £24.2m
reduction in trade and other receivables to £124.0m and a £21.5m reduction
in assets held for sale to £14.7m, which have been partially offset by an
£23.9m increase in cash and cash equivalents.
The £37.8m decrease in current liabilities in 2023 was mainly driven by a
£9.0m reduction in trade and other payables to £113.4m, a £15.6m reduction
in liabilities associated with assets held for sale and a £16.3m reduction in
short-term borrowings to £51.1m, which were partially offset by a £4.1m
increase in provisions to £9.4m. The increase in provisions in 2023 largely
relates to a £6.4m charge relating to potential liabilities on parent company
guarantees for JFN.
Short-term bank borrowings (i.e. overdrafts) have reduced to £51.1m from
£67.4m at 31 December 2022, with the net position of short-term cash and
short-term borrowings increasing to £26.4m (31 December 2022: £22.8m).
Non-current liabilities
Long-term liabilities, at £220.9m, are £56.7m higher than at 31 December
2022. The change in 2023 is largely the result of increase of £44.8m in
long-term borrowings, £8.5m in long-term lease liabilities, £2.9m in
provisions and £1.2m in retirement benefit obligations.
The £44.8m increase in long-term borrowings was largely due to £36.6m
borrowed under the revolving credit facility in December 2022, which was
classified as a current liability in the prior year, whereas, following the
completion of the refinancing in June 2023, all amounts drawn under the
current banking facilities have all been classified as non-current
liabilities.
Technical guidance for 2024
The 2024 results will reflect the following portfolio actions:
· The exit from Subtech Europe, which ceased operations in December
2023 (the business contributed c.£40.0m of revenue to continuing operations
in 2023); and
· The sale of RMSpumptools, which is expected, subject to the
satisfaction of various conditions, to complete in H2 2024 (the business
contributed revenue of £42.5m and £12.1m of EBITDA to continuing operations
in 2023).
The net proceeds of the RMSpumptools disposal, which are expected to be
c.£83m, will be used to reduce the drawn balance under the RCF. As such, the
net interest expense is expected to reduce post- completion.
Capital expenditure in 2024 is expected to be at similar levels to 2023.
The adjusted effective tax rate for 2024 is 29% representing the Group
operating in higher tax rate overseas territories.
Principal risks and uncertainties
The principal risks and uncertainties affecting the Group are listed below and
are set out in more detail in the Company's Annual Report and Financial
Statements 2023, which should be read in conjunction with this announcement
when published. This list is not a substitute for reading the Company's Annual
Report and Financial Statements 2023 in full. The Group's principal risks and
uncertainties are:
1. Group transformation: The Group is undertaking a transformation
including a new strategy, operating model and initiatives such as supply
chain, technology improvements and a people strategy as well as aligning the
business portfolio. Additionally, new opportunities that the Group may pursue
in new geographies may stretch Group and management resources.
2. Maintaining access to adequate funding: The Group has experienced
difficult trading conditions over the last few years and currently has a
revolving credit facility which matures in 2025 and net debt / EBITDA ranges
which are currently outside our target range. To minimise this risk the Group
has to strengthen its balance sheet and obtain and retain adequate committed
facilities. The Group has recognised the adverse effects of the financial
resilience risk on our balance sheet and will actively manage this risk via
its capital allocation policy.
3. Health and safety: Our operations entail the potential risk of
significant harm to people and property, wherever we operate across the world.
Our operations entail the potential risk of significant harm to people and
property, wherever we operate across the world. For both moral, financial
and reputational reasons we would wish to keep the risk as low as possible.
4. Cyber security: A key factor for our customers is our ability to
deliver secure IT and other information assurance systems to maintain the
confidentiality of sensitive information. IT and Cyber Security are
fundamental components to our operations, and we continually review the
emergence of cyber threats in an effort to eradicate and mitigate the risk as
far as possible.
5. Operating in emerging markets: We rely on winning and retaining
contracts in both existing and new markets with a variety of customers
including major energy customers and customers owned and controlled by
national governments. Operating in emerging markets can expose the Group to
risks such legislative restrictions, sanctions, exchange controls and working
with joint venture partners. Projects will be undertaken where we are
confident that risks can be managed.
6. Climate change: Sustainability is an integral part of our corporate
strategy, and our global business employs short, medium, and long terms
control measures to manage climate risks.
7. Contractual risk: We execute contracts which often require us to price
for the long term and for risk transfer. Our contracts can include fixed
prices. This reflects the complex nature of the work within the defence and
energy services sectors and the complexity in how we operate with customers
and suppliers. We seek to mitigate this risk by applying our contracting
principles where possible and ensuring robust contract approval processes.
8. Project delivery: We operate contracts in hazardous environments with
contracts that could be subject to change and require robust project
management. Given the nature of the contracts in multiple geographies and
customers with a variety of contractual and macro risks. We accept delivery
risks but manage these to ensure adequate project management skills, the
necessary engineering and technical capabilities and robust contractual
provisions.
9. Recruitment and retention of staff: We operate in many specialised
engineering and technical domains which require appropriate skills and
experience. Risks have to be accepted and managed to avoid the risk of
increase costs and minimising a potential negative workforce engagement and
retention. Some risk is accepted given by sharing capability across our
business and compensating for skills shortages in particular areas and
developing talent in-house.
10. Financial risk: The Group is exposed to a number of financial risks, some
of which are of a macroeconomic nature (for example, foreign currency,
interest rates) and some of which are more specific to the Group (for example
credit risks).
11. Acquisitions and disposals (NEW): The Group has been formed organically
and through acquisitions. Transactions are complex, time-consuming, and
expensive. If we believe that a business does not fit with the Group's
strategic direction we may decide to sell that business. Transactions will be
undertaken where the risk is considered manageable.
12. Regulatory and compliance (NEW): Our businesses are subject to the laws,
regulations and restrictions of the many jurisdictions in which they operate.
The Group seeks to ensure compliance with best practices and regulatory
requirements. JFS has zero tolerance for regulatory risk around risks such as
anti-bribery and corruption and modern slavery.
13. Product risk (NEW): The Group designs innovative products for use in the
Energy, Defence and Maritime Transport markets. With any new product
development there are risks of warranty claims or identification of issues to
be remediated. The Group seeks to minimise such risks by rigorous testing
and quality review processes. There is also the risk of failing to innovate
to ensure a pipeline of product development. The Group seeks to invest to
strengthen capabilities in this area including the appointment of the Group's
Chief Technology Officer and ensure the development of products to meet
customer requirements.
Consolidated income statement
for the year ended 31 December 2023
Notes Year ended Year ended
31 December 31 December
2023 2022(1)
Total Total
£m £m
Continuing operations
Revenue 3 496.2 478.1
Cost of sales (360.3) (350.9)
Gross profit 135.9 127.2
Administrative expenses (109.6) (97.5)
Impairment charges (28.4) (4.9)
Refinancing costs (12.2) -
Restructuring costs (5.7) (1.7)
Share of post-tax results of associates 1.4 1.6
Operating (loss)/profit (18.6) 24.7
Finance income 3 3.2 0.7
Finance expense 3 (24.5) (10.9)
(Loss)/profit before taxation (39.9) 14.5
Income tax 5 (11.0) (5.5)
(Loss)/profit for the year from continuing operations (50.9) 9.0
Loss for the year from discontinued operations, net of tax 4 (11.4) (19.8)
Loss for the year (62.3) (10.8)
Attributable to:
Owners of the Company (62.4) (11.1)
Non-controlling interests 0.1 0.3
(62.3) (10.8)
Loss per share pence pence
Basic 6 (123.9) (22.1)
Diluted 6 (123.9) (22.1)
(Loss)/profit per share - continuing activities pence pence
Basic 6 (101.2) 17.4
Diluted 6 (101.2) 17.4
( )
(1)Impairment costs (£4.9m) and restructuring costs (£1.7m) for the year
ended 31 December 2022 which were previously included within administrative
expenses have been represented to conform with the current year presentation
of these costs.
Consolidated statement of other comprehensive income
for the year ended 31 December 2023
Year ended Year ended
31 December 31 December
2023 2022
£m £m
Loss for the year (62.3) (10.8)
Other comprehensive income:
Items that will not be classified to the income statement
Actuarial gain in defined benefit pension schemes 1.6 7.1
Tax on items that will not be reclassified (0.3) (1.3)
1.3 5.8
Items that may be reclassified to the income statement
Exchange differences on foreign currency net investments (8.1) 8.8
Effective portion of changes in fair value of cash flow hedges (0.3) 3.6
Effective portion of changes in fair value of cash flow hedges in joint (0.1) 0.4
ventures
Net changes in fair value of cash flow hedges transferred to income statement (0.9) 0.6
Tax on items that may be reclassified (0.3) (1.1)
(9.7) 12.3
Total other comprehensive income for the year (8.4) 18.1
Total comprehensive income for the year (70.7) 7.3
Attributable to:
Owners of the Company (70.8) 6.9
Non-controlling interests 0.1 0.4
(70.7) 7.3
Consolidated statement of financial position
at 31 December 2023
Group Company
Notes 31 December 31 December 31 December 31 December
2023 2022 2023 2022
£m £m £m £m
Non-current assets
Goodwill 78.3 116.3 - -
Other intangible assets 6.3 8.2 - -
Property, plant and equipment 118.0 119.7 1.0 1.1
Right-of-use assets 67.4 52.3 0.8 1.0
Investment in joint ventures 8.4 8.7 - -
Investments and loans to subsidiaries - - 376.7 456.5
Other investments 1.4 1.4 1.4 1.4
Retirement benefit surplus 9 7.4 5.5 7.4 5.5
Other receivables 4.0 0.7 - -
Deferred tax assets 4.1 8.4 0.1 -
295.3 321.2 387.4 465.5
Current assets
Inventories 46.7 49.8 - -
Trade and other receivables 124.0 148.2 14.2 22.2
Assets held for sale 8 14.7 36.2 - -
Cash and cash equivalents 10 77.5 53.6 10.9 0.4
262.9 287.8 25.1 22.6
Current liabilities
Trade and other payables (113.4) (122.4) (33.9) (27.2)
Provisions (9.4) (5.3) (8.4) -
Liabilities associated with assets held for sale (0.7) (16.3) - -
Current tax (1.1) (1.9) (2.8) -
Borrowings 10 (51.1) (67.4) (13.7) (45.3)
Lease liabilities (13.0) (13.2) (0.6) (0.2)
(188.7) (226.5) (59.4) (72.7)
Net current assets 74.2 61.3 (34.3) (50.1)
Total assets less current liabilities 369.5 382.5 353.1 415.4
Non-current liabilities
Other payables - (0.5) - -
Provisions (4.3) (1.4) - -
Retirement benefit obligations 9 (1.6) (0.4) (0.5) (0.2)
Cumulative preference shares (0.1) (0.1) (0.1) (0.1)
Borrowings (166.6) (121.8) (166.6) (121.8)
Lease liabilities (48.2) (39.7) (0.7) (1.3)
Deferred tax liabilities (0.1) (0.3) - (0.8)
(220.9) (164.2) (167.9) (124.2)
Net assets 148.6 218.3 185.2 291.2
Equity
Called up share capital 11 12.6 12.6 12.6 12.6
Share premium 26.8 26.8 26.8 26.8
Treasury shares (0.5) (0.6) (0.5) (0.6)
Other reserves (16.4) (6.8) 2.5 3.6
Retained earnings 125.5 185.8 143.8 248.8
Total shareholders' equity 148.0 217.8 185.2 291.2
Non-controlling interests 0.6 0.5 - -
Total equity 148.6 218.3 185.2 291.2
Consolidated cash flow statement
for the year ended 31 December 2023
Group Company
Notes 31 December 31 December 31 December 31 December
2023 2022 2023 2022
£m £m £m £m
Loss for the year (62.3) (10.8) (106.5) (11.6)
Tax (credit)/charge 12.0 4.7 2.8 (0.5)
Adjustments to reconcile (loss)/profit before tax to net cash flows
Depreciation and amortisation 41.2 41.1 0.6 0.8
Impairments 28.1 0.7 75.6 27.7
Loss on remeasurement to fair value less costs to sell - 13.3 - -
Net finance expense/(income) 21.3 10.3 (7.2) (6.1)
Loss/(gain) on disposal of businesses, net of disposal costs 2.1 (2.5) 2.1 -
Gains on disposals of property, plant and equipment (2.5) (1.1) - -
Other non-cash items (1.3) (0.6) (0.6) 0.1
Decrease/(increase) in inventories 0.1 (3.2) - -
Decrease/(increase) in trade and other receivables 10.7 2.5 (0.4) (3.9)
(Decrease)/increase in trade and other payables (4.1) (1.9) 14.9 5.2
Defined benefit pension cash contributions less service cost 1.1 0.1 (0.2) 0.3
Cash generated from operations 46.4 52.6 (18.9) 12.0
Income tax payments (8.6) (8.1) - (0.1)
Cash flow from operating activities 37.8 44.5 (18.9) 11.9
Investing activities
Dividends from joint venture undertakings 1.2 1.7 - -
Proceeds from the disposal of a subsidiary, net of cash disposed (3.2) 15.1 (3.2) -
Proceeds from the disposal of property, plant and equipment* 25.6 2.2 - -
Finance income 2.9 0.8 27.6 14.7
Acquisition of subsidiaries, net of cash acquired - (2.6) - -
Loans advanced to subsidiaries - - (15.3) (34.8)
Loans repaid from subsidiaries - - 26.3 32.8
Acquisition of property, plant and equipment (29.4) (31.7) (0.2) (0.4)
Development expenditure (1.8) (1.3) - -
Cash flows (used in)/from investing activities (4.7) (15.8) 35.2 12.3
Financing activities
Finance costs (15.7) (7.5) (15.9) (7.2)
Acquisition of non-controlling interests (NCI) - (1.5) - -
Capital element of lease repayments (18.1) (14.5) (0.4) (0.2)
Proceeds from borrowings 198.1 166.0 198.1 166.0
Repayment of borrowings (191.7) (182.6) (191.7) (182.5)
Cash flows used in financing activities (27.4) (40.1) (9.9) (23.9)
Net increase in cash and cash equivalents 10 5.7 (11.4) 6.4 0.3
Cash and cash equivalents at 1 January 22.8 34.5 (8.3) (8.6)
Net foreign exchange differences (1.7) 2.5 (0.9) -
Cash transferred to asset held for sale (0.4) (2.8) - -
Cash and cash equivalents at 31 December 26.4 22.8 (2.8) (8.3)
* Proceeds from disposal of property plant and equipment includes £19.8m
(2022: £nil) from assets held for sale (see Note 8).
Consolidated statement of changes in equity
for the year ended 31 December 2023
Share Share Retained Other Treasury Total Non- Total
capital premium earnings reserves shares shareholders' controlling equity
£m £m £m £m £m equity interests £m
£m £m
At 1 January 2022 12.6 26.8 191.5 (20.4) (0.6) 209.9 0.7 210.6
Loss for the year - - (11.1) - - (11.1) 0.3 (10.8)
Other comprehensive income - - 5.8 12.2 - 18.0 0.1 18.1
Contributions by and distributions to owners:
Remeasurement of non-controlling interest put option - - - 1.4 - 1.4 - 1.4
Changes in ownership interest without a change in control - - (0.9) - - (0.9) (0.6) (1.5)
Share-based payments - - 0.5 - - 0.5 - 0.5
At 31 December 2022 12.6 26.8 185.8 (6.8) (0.6) 217.8 0.5 218.3
Loss for the year - - (62.4) - - (62.4) 0.1 (62.3)
Other comprehensive income - - 1.3 (9.7) - (8.4) - (8.4)
Contributions by and distributions to owners:
Remeasurement of non-controlling interest put option - - - 0.1 - 0.1 - 0.1
Share-based payments - - 1.0 - - 1.0 - 1.0
Sale of shares by ESOT - - (0.2) - 0.1 (0.1) - (0.1)
At 31 December 2023 12.6 26.8 125.5 (16.4) (0.5) 148.0 0.6 148.6
Other reserve movements
Other reserves Translation Hedging Put option Total
reserve reserve liability £m
£m £m £m
At 1 January 2022 (16.9) (1.0) (2.5) (20.4)
Other comprehensive income 8.7 3.5 - 12.2
Remeasurement of non-controlling interest put option - - 1.4 1.4
At 31 December 2022 (8.2) 2.5 (1.1) (6.8)
Other comprehensive loss (8.1) (1.6) - (9.7)
Remeasurement of non-controlling interest put option - - 0.1 0.1
At 31 December 2023 (16.3) 0.9 (1.0) (16.4)
Notes to the Preliminary results
1. General information
James Fisher and Sons plc (the Company) is a public limited company registered
and domiciled in England and Wales and listed on the London Stock Exchange.
The consolidated financial statements comprise the financial statements of the
Company, its subsidiary undertakings and its interest in associates and
jointly controlled entities (together the Group), The Company's shares are
listed on the London Stock Exchange. The Company and consolidated financial
statements were approved for publication by the Directors on 16 April 2024.
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2023 or 2022 but is derived
from those accounts. Statutory accounts for 2022 have been delivered to the
registrar of companies, and those for 2023 will be delivered in due course.
The auditor has reported on those accounts; their reports were (i)
unqualified, (ii) included reference to a matter to which the auditor drew
attention by way of emphasis without qualifying their report in respect of a
material uncertainty in respect of going concern (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006.
Going concern
In determining the appropriate basis of preparation of the financial
statements ended 31 December 2023, the Board is required to consider whether
the Group can continue in operational existence for a period of at least 12
months from the date of approval of the Financial Statements. The Board has
concluded that it is appropriate to adopt the going concern basis, having
undertaken a rigorous assessment of the financial forecasts, key uncertainties
and sensitivities, as set out below.
On 6 June 2023, the Group signed a £209.9m secured revolving credit facility,
maturing in March 2025 (the "RCF"), which was provided by the six pre-existing
lenders to the Group.
There are a number of mandatory repayments (both scheduled and where cash is
generated from disposals) incorporated into the facility terms. At the time
when the facility terms were negotiated, the timing of these repayments were
intended to align with forecast cash inflows. However, as cash inflows can
vary from forecast due to timings of projects and revenue receipts, prior to
the year end, the Group obtained appropriate waivers to alter the phasing and
quantum of the December 2023 mandatory repayment. This quantum of this
mandatory repayment has been reduced and is now due in June 2024. As a
result, the facility was reduced by the debt repayments leaving committed
facilities at 31 December 2023 of £192.7m (2022: £247.5m) and undrawn
committed facilities of £24.7m (2022: £88.0m).
The facility contains a restriction on capital expenditure spend as well as
minimum liquidity requirements. It also contains reducing Net debt/ EBITDA
covenants and increasing interest cover requirements throughout the facility
and certain non-financial covenants. The Group, with the ongoing support of
the banking syndicate, has remained in compliance with all covenants and
remained so at the 31 December 2023 measurement date.
The Group's net debt for the purposes of banking covenants consists of net
bank borrowings adjusted for finance lease liabilities (on a pre-IFRS 16
basis) and advance payment guarantees. The net debt for covenant purposes was
£149.7m as at 31 December 2023 and the net debt/ EBITDA ratio of 2.75 times
(2022 2.7 times). This remains above the Group's target range of 1-1.5
times. The Group was in compliance with all financial covenants for the year
ended 31 December 2023.
In anticipation of covenant compliance throughout the going concern assessment
period being challenging based on the original requirements of the RCF,
subsequent to the year end the Group has agreed with the banking syndicate to
reset the covenant levels on the net debt/EBITDA and interest cover ratios,
and minimum liquidity, under the RCF to less onerous levels for the remaining
duration of the facility. The testing requirement has also been altered from
monthly to quarterly for the net debt/EBITDA covenant.
Going concern assessment period
Accounting standards require the directors to assess the Group's ability to
continue to operate as a going concern for at least 12 months from the date of
approval of the financial statements. The Board has considered an appropriate
period for going concern assessment considering any known liquidity events
that will occur after the twelve-month period. Given that the RCF matures in
March 2025, the directors concluded that the twelve-month going concern
assessment period to 30 April 2025 is appropriate.
Board assessment
Base case
The Group has prepared its base case based on the budget/plan for the period
to 30 April 2025.
The base case also considers downside risks to business performance that could
arise in the period and restricts capital expenditure in line with the limit
for FY24 in the RCF. Given parts of the Group's business involves securing new
contracts which can be delayed or cancelled, cash flows have been adjusted to
take account of such risks materialising. Although the intention of the Group
is to continue the disposals of non-strategic assets and businesses, the base
case does not include such disposals or acquisitions as these are not in the
direct control of the Group.
The forecasts also take account of the macro-economic environment such as
potential increases in interest rates, inflationary pressures and shifts in
market trends. The base case demonstrated the Company would have headroom
against its facilities and would comply with financial covenants over the
going concern assessment period.
Severe but plausible downside scenario
The Group also modelled severe but plausible downside scenarios in which the
Board has taken account of the following:
§ trading downside risks, which assume the Group is not successful in
delivering the anticipated profitability levels due to risks associated with
contract wins and/or delays and forecast margins achievement resulting in
operating profit reduction of 21% in the full year to December 2024 from the
adjusted base budget and a reduction of 23% January 2025 to April 2025;
§cash inflow disruptions that may result from late payments from customers or
project delivery challenges; and
§ further short term increases in interest rates from the current rate of
5.25% to 5.5% SONIA rate between June 2024 and December 24.
Under a combination of all of the above downside scenarios ("the combined
severe but plausible scenario"), prior to mitigating actions within the
control of management, the forecasts indicate that the Directors would
potentially need to request a waiver from the lenders in relation to the
mandatory repayment of £3.5m that is required in June 2024, and seek
additional funding, in order for the Group to continue to meet its liabilities
as they fall due. The combined severe but plausible scenario also results in
limited headroom on financial covenant compliance in the going concern
assessment period, prior to mitigating actions. However, the Directors are
confident that they have a number of controllable mitigating actions that
could be implemented regardless of whether a waiver for the mandatory
repayment from the lenders is obtained, including reducing discretionary spend
on certain projects and hiring freezes. After the effect of these mitigations
the combined severe but plausible scenario indicates that the Group can make
the June repayment and would remain cash positive and in compliance will all
financial covenants, albeit with limited headroom. In addition, whilst not a
controllable mitigation, the Directors will also seek to negotiate an
extension of creditor terms with certain suppliers if required.
In addition, due to the quarterly and monthly covenant testing requirements
within the RCF, there is an inherent timing risk associated with both profits
and large project related customer receipts. Therefore there is a risk
that should the combined severe but plausible scenario outlined above
materialise, additional support from the lender group may be necessary to
avoid any temporary non-compliance with covenants. The Group will continue to
actively manage its cashflow to mitigate this risk and operate within the
terms of the RCF.
As part of the RCF, there is a non-financial covenant that requires the Group
to provide signed audited financial statements for all guarantors party to the
banking arrangement within 180 days of the year end. As at 31 December 2023,
the Group has obtained a waiver from the banks for certain guarantors where
this covenant requirement has not been met in respect of 31 December 2022
audited financial statements. The Board believe that they are able to meet the
revised signing dates as outlined in this waiver however acknowledge that
should the revised signing dates not be met then an additional waiver will
need to be obtained to prevent a breach to the Group's banking facility.
Expiry of RCF during the going concern assessment period
As noted above, the RCF expires on 31 March 2025. The ability to refinance is
not fully within the control of the Directors, however the Group has
successfully negotiated facilities in the past and is also looking to
deleverage its balance sheet within the next 12 months with various planned
disposals of non-strategic businesses together with asset sales. On 22 March
2024, the Group announced that it entered into an agreement for sale of the
entire issued share capital of RMSpumptools Limited (RMS) the estimated net
proceeds of which are approximately £83m. These proceeds will be used to
reduce leverage and strengthen the Group's balance sheet. The disposal is
expected to complete early in H2 2024, subject to certain conditions.
Demonstrating the ability of the Group to reduce debt levels to within our
target net debt / EBITDA range of 1-1.5x before a refinancing is undertaken
should make it easier to execute the Group's refinancing plan and put in place
new facilities during 2024 on more favourable terms than the current facility.
The Directors acknowledge that within the existing terms of the RCF upon
completion of disposals amounts borrowed under the RCF are required to be
repaid but these amounts are not specified. Should the disposal of RMS occur
the Directors are confident that this would not result in a scenario worse
than the combined severe but plausible scenario for liquidity however there
would be a breach of the interest cover covenant in December 2024 under the
current RCF as the covenant is calculated on a twelve-month rolling basis. The
Directors also expect that the new facilities on more favourable terms will be
in place prior to December 2024. Should the RMS disposal or alternative
planned disposals not successfully complete, the Directors may need to
consider other refinancing alternatives when the existing RCF expires.
Assessment Conclusion
Based on their assessment, the Directors believe it remains appropriate to
prepare the financial statements on a going concern basis. However, the
Directors recognise that the reliance on successful mitigating actions and,
potentially, a waiver of the June 2024 mandatory repayment under the combined
severe but plausible scenario, and the ability to refinance the RCF, which
matures within the going concern assessment period, indicate the existence of
a material uncertainty, related to events or conditions that may cast
significant doubt on the Group's and the company's ability to continue as a
going concern and, therefore, that the group and company may be unable and to
realise their assets and discharge their liabilities in the normal course of
business. The financial statements do not include any adjustments that would
result from the basis of preparation being inappropriate.
2. Alternative performance measures
The Group uses a number of alternative (non-Generally Accepted Accounting
Practice (non-GAAP)) performance measures which are not defined within IFRS.
The alternative performance measures (APMs) should be considered in addition
to and not as a substitute or superior to the information presented in
accordance with IFRS, as APMs may not be directly comparable with similar
measures used by other companies.
The Group believes that APMs, when considered together with IFRS results,
provide the readers of the financial statements with complementary information
to better understand and compare the financial performance and position of the
Group from period to period. The adjustments are usually items that are
significant in size and/or non-recurring in nature. These measures are also
used by management for planning, reporting and performance management
purposes. Some of the measures form part of the covenant ratios calculation
required under the terms of the Group's loan agreements.
As APMs include the benefits of restructuring programmes or use of the
acquired intangible assets but exclude certain significant costs, such as
amortisation of intangible assets, litigation, material restructuring and
transaction items, they should not be regarded as a complete picture of the
Group's financial performance, which is presented in its IFRS results. The
exclusion of adjusting items may result in underlying profits/(losses) being
materially higher or lower than IFRS earnings.
During the year a review of the measures was undertaken and as a consequence
the ROCE measure (2.4 below) and the Underlying EPS measure (2.6 below) have
been updated to reflect earnings from continuing operations, thereby excluding
the results of discontinued operations which is non-recurring and thereby
improves comparability between periods and peers'.
The following APMs are referred to in the Annual Report and Accounts and
described in the following paragraphs.
2.1 Underlying operating profit
Underlying operating profit is defined as operating profit from continuing
operations adjusted for acquisition related income and expense (amortisation
or impairment of acquired intangible assets, acquisition expenses, adjustments
to contingent consideration), the costs of a material restructuring,
litigation, asset impairment and profit/loss relating to the sale of
businesses or any other significant one-off adjustments to income or expenses
(adjusting items).
Underlying operating profit is used as a basis for net debt/EBITDA and
interest cover covenant calculation, required under the terms of the Group's
loan agreements. This APM is also used internally to measure the Group's
performance against previous years and budgets, as the adjusting items
fluctuate year-on-year and may be unknown at the time of budgeting.
Continuing operations
2023 As Amortisation Impairment Refinancing Re- Disposal of businesses Other/Tax Underlying
Continuing operations reported of acquired charges/ £m structuring and assets £m results
£m intangible (reversals) £m £m £m
assets £m
£m
Revenue 496.2 - - - - - - 496.2
Cost of sales (360.3) - - - - (1.8) - (362.1)
Gross profit 135.9 - - - - (1.8) - 134.1
Administrative expenses (109.6) 1.1 - - - 0.1 2.8 (105.6)
Impairment charges (28.4) - 28.1 - (0.3)
- - -
Refinancing costs (12.2) - - 12.2 - - - -
Restructuring costs (5.7) - - - 5.7 - - -
Share of post-tax results of associates 1.4 - - - 1.4
- - -
Operating profit/(loss) (18.6) 1.1 28.1 12.2 5.7 (1.7) 2.8 29.6
Finance income 3.2 - - - - - - 3.2
Finance expense (24.5) - - - - - - (24.5)
(Loss)/profit before taxation (39.9) 1.1 28.1 12.2 5.7 (1.7) 2.8 8.3
Income tax (11.0) (0.3) - - - - 5.3 (6.0)
(Loss)/profit for the year from continuing operations (50.9) 0.8 28.1 12.2 5.7 (1.7) 8.1 2.3
Discontinued operations
(Loss)/profit for the year from discontinued operations, net of tax (11.4) - - - - - - (11.4)
(Loss)/profit for the year (62.3) 0.8 28.1 12.2 5.7 (1.7) 8.1 (9.1)
Operating margin (%) (3.7)% 6.0%
Segmental underlying operating profit is calculated as follows:
Energy 9.5 0.6 2.1 - 3.6 (0.4) 0.3 15.7
Defence (23.7) - 24.7 - 0.5 - - 1.5
Maritime Transport 21.7 0.5 1.3 - 1.5 (1.4) (0.3) 23.3
Corporate (26.1) - - 12.2 0.1 0.1 2.8 (10.9)
Continuing operations (18.6) 1.1 28.1 12.2 5.7 (1.7) 2.8 29.6
During the year, adjusting items were in relation to the following matters:
The amortisation of acquired intangibles.
The impairment charges/(reversals) relate to goodwill, right-of-use vessels,
tangible assets and investments.
Refinancing is related to the costs of signing of the new RCF, refinancing
strategy, obtaining a waiver from the Group's lenders and completion of
various requirements and conditions of the RCF.
Restructuring costs relates to the transformation programme aimed at
simplification, rationalisation and integration of the Group's businesses
across all three Divisions and includes £3.1m in relation to the closure of
the Subtech Europe business in the Energy Division.
Disposal of businesses and assets primarily relates to a gain of £1.4m on
disposal of a vessel in the Maritime Transport Division.
Other primarily relates to £2.2m past service costs recognised for the MNRPF
scheme as part of the review of the Fund's administrative and benefit
practices carried out by the Fund's lawyers.
£4.7m of the tax charge relates to de-recognition of the brought forward net
UK deferred tax asset as at 31 December 2022. An assessment was
undertaken leading to de-recognition of a deferred tax asset which has a
significant and non-recurring impact in the current year.
Continuing operations
2022 As Amortisation Impairment Specific Re- Disposal of businesses Other/Tax Underlying
Continuing operations reported of acquired charges/ trade structuring and assets £m results
£m intangible (reversals) receivables £m £m £m
assets £m provision
£m £m
Revenue 478.1 - - - - - - 478.1
Cost of sales (350.9) - (4.5) - - (0.9) - (356.3)
Gross profit 127.2 - (4.5) - - (0.9) - 121.8
Administrative expenses (97.5) 2.1 - - - (2.5) 1.7 (96.2)
Impairment charges (4.9) - 5.2 (1.1) - - - (0.8)
Restructuring costs (1.7) - - - 1.7 - - -
Share of post-tax results of associates 1.6 - - - - - - 1.6
Operating profit/(loss) 24.7 2.1 0.7 (1.1) 1.7 (3.4) 1.7 26.4
Finance income 0.7 - - - - - - 0.7
Finance expense (10.9) - - - - - - (10.9)
Profit/(loss) before taxation 14.5 2.1 0.7 (1.1) 1.7 (3.4) 1.7 16.2
Income tax (5.5) - - - - - 0.8 (4.7)
Profit/(loss) for the year from continuing operations 9.0 2.1 0.7 (1.1) 1.7 (3.4) 2.5 11.5
Discontinued operations
(Loss)/profit for the year from discontinued operations, net of tax (19.8) - - - - - - (19.8)
(Loss)/profit for the year (10.8) 2.1 0.7 (1.1) 1.7 (3.4) 2.5 (8.3)
Operating margin (%) 5.2% 5.5%
Segmental underlying operating profit is calculated as follows:
Energy 16.4 1.6 (0.8) (1.1) - (2.5) 0.2 13.8
Defence (3.5) 0.1 1.8 - 1.3 - - (0.3)
Maritime Transport 19.2 0.4 (0.3) - 0.4 (0.9) - 18.8
Corporate (7.4) - - - - - 1.5 (5.9)
Continuing operations 24.7 2.1 0.7 (1.1) 1.7 (3.4) 1.7 26.4
During 2022, adjusting items were in relation to the following matters:
Amortisation of acquired intangibles.
The impairment charges/(reversals) relate to goodwill, intangible and tangible
assets, and assets held for sale.
Specific trade receivables provision relates to a recovery of amounts provided
for in 2021 in relation to specific counterparty risk and receivables billed
over 12 months ago in relation to certain projects.
Restructuring costs relates to restructuring programmes completed during the
year by the Fendercare and JFD businesses.
Disposal of businesses and assets relates to the disposal during 2022 of James
Fisher Mimic Ltd, Prolec Ltd and Strainstall UK Ltd for £18.5m proceeds with
£4.3m gains less £1.8m costs of disposal. In addition, the Group has
recognised a gain of £0.9m on disposal of one of its vessels in the Maritime
Transport Division.
Other includes £1.5m past service cost recognised for the MNRPF scheme in
respect of ill health early retirement benefits.
2.2 Covenant EBITDA (Earnings before Interest, Tax, Depreciation and
Amortisation)
Covenant EBITDA is calculated in line with the Group's banking covenants. It
is defined as the underlying operating profit before interest, tax,
depreciation and amortisation, adjusted for impacts of IFRS 16. The covenants
require that EBITDA is calculated excluding the effects of IFRS 16. The IFRS
16 adjustment is calculated as a difference between ROU depreciation and
operating lease payments.
2023 2022
£m* £m*
Underlying operating profit 29.6 26.4
Depreciation and amortisation 41.2 40.3
Less: Depreciation on right-of-use assets (16.3) (12.2)
Amortisation of acquired intangibles (1.1) (2.1)
IFRS 16 impact removed 1.0 0.2
Covenant EBITDA 54.4 52.6
* Excludes discontinued operations.
2.3 Leverage
Leverage is calculated in line with the Group's banking covenants. It is
defined as Covenant EBITDA divided by underlying net borrowings. Underlying
net borrowings is net borrowings including guarantees, and excluding
right-of-use operating leases, which are the leases which would be considered
operating leases under IAS17, prior to the introduction of IFRS 16. Guarantees
are those issued by a bank or financial institution to compensate a
stakeholder in the event of a Group company not fulfilling its obligations in
the ordinary course of business in relation to either advance payments or
trade debtors.
2023 2022
£m £m
Net borrowings 201.1 185.8
Less: right-of-use operating leases(1) (56.9) (46.0)
Guarantees and collateral deposits 5.6 2.3
Underlying net borrowings 149.8 142.1
Covenant EBITDA 54.4 52.6
Net debt:EBITDA 2.75 2.70
(1) In accordance with IFRS 16 Leases, the Group has recognised a lease
liability of £61.2m at 31 December 2023. Under the calculation of "net debt -
covenant basis", only those leases which would be classified as finance leases
under IAS 17 Leases, the standard superceded by IFRS 16, are considered to be
debt. Of the £61.2m lease liability recognised under IFRS 16, only £4.3m
would be classified as finance leases under IAS 17 and accordingly £56.9m is
adjustment in the net debt calculation.
2.4 Underlying Capital employed and Return on Capital Employed (ROCE)
Capital employed is defined as net assets less right-of-use assets, less cash
and cash equivalents and after adding back borrowings. Average capital
employed is adjusted for the timing of businesses acquired and after adding
back cumulative amortisation of customer relationships. Segmental ROCE is
defined as the underlying operating profit from continuing activities, divided
by average capital employed. Group ROCE is defined as underlying operating
profit, less notional tax, calculated by multiplying the underlying effective
tax rate by the underlying operating profit, divided by average capital
employed, as calculated below. Group ROCE is a KPI that is used internally and
externally and forms part of performance conditions under the Group's LTIP
scheme.
2023 2022
£m £m
Net assets 148.6 218.3
Less right-of-use assets (67.4) (52.3)
Plus net borrowings 201.1 185.8
Capital employed 282.3 351.8
Add: amortisation of customer relationships 1.0 1.6
283.3 353.4
Underlying operating profit 29.6 26.4
Notional tax at the underlying effective tax rate (8.6) (7.5)
21.0 18.9
Average capital employed 318.4 355.1
Return on average capital employed 6.6% 5.3%
Year ended 31 December 2023 Energy Defence Maritime Transport
£m £m £m
Net assets 156.6 51.6 83.8
Less right-of-use assets (14.3) (3.8) (48.7)
Plus net borrowings 16.4 3.9 39.7
Capital employed 158.7 51.7 74.8
Add: amortisation of customer relationships 0.5 - 0.4
159.2 51.7 75.2
Underlying operating profit 15.7 1.5 23.3
Average capital employed 168.4 68.5 77.1
Return on average capital employed 9.3% 2.1% 30.3%
Year ended 31 December 2022 Energy Defence Maritime Transport
£m £m £m
Net assets 172.3 84.9 82.8
Less right-of-use assets (9.2) (3.0) (39.0)
Plus net borrowings 13.4 3.3 34.8
Capital employed 176.5 85.2 78.6
Add: amortisation of customer relationships 1.1 0.1 0.4
177.6 85.3 79.0
Underlying operating profit 13.9 (0.4) 18.8
Average capital employed 173.6 84.7 83.2
Return on average capital employed 8.0% (0.4%) 22.5%
2.5 Interest cover
Interest cover is calculated in line with the Group's banking covenants. It is
defined as a ratio of underlying net operating profit, adjusted for IFRS16
impact, to covenant interest.
2023 2022
£m £m
Interest payable on bank loans less interest receivable on short-term deposits 17.6 8.1
Finance lease interest 0.1 0.1
Loan arrangement and other financing fees (4.4) (1.0)
Covenant interest 13.3 7.2
Underlying net operating profit 29.6 26.4
IFRS 16 impact removed 0.3 (0.7)
29.9 25.7
Interest cover 2.2 3.5
2.6 Underlying earnings per share
Underlying earnings per share (EPS) is calculated as the total of underlying
profit before tax from continuing activities, less income tax, but excluding
the tax impact on adjusting items and adjusted for deferred tax on finance
charges, less profit attributable to non-controlling interests, divided by the
weighted average number of ordinary shares in issue during the year.
Underlying earnings per share is a performance condition used for the LTIP
schemes.
2023 2022
£m £m
Loss attributable to owners of the Company (51.0) 8.7
Adjusting items 48.2 1.7
Tax on adjusted items 5.0 0.8
Deferred tax on finance charges 3.6 -
Underlying loss attributable to owners of the Company 5.8 11.2
Basic weighted average number of shares 50,358,388 50,345,989
Diluted weighted average number of shares 50,634,837 50,367,147
Underlying basic earnings per share 11.4 22.3
Underlying diluted earnings per share 11.4 22.3
3. Segmental information
From 1 January 2023, the Group has been re-organised into three operating
segments reviewed by the Board: Energy, Defence, and Maritime Transport. The
Energy Division combines the old Marine Support and Offshore Oil Divisions,
minus Fendercare, which is added to the Tankships Division to create Maritime
Transport. Specialist Technical (JFD business) is the only component of the
Defence Division. The comparative segmental information for 2022 has been
restated accordingly. Energy and Defence are differentiated by markets and
industries which they serve. The Maritime Transport Division is differentiated
by the services which they provide. The Board assesses the performance of the
segments based on underlying operating profit, underlying operating margin and
return on capital employed. It considers that this information is the most
relevant in evaluating the performance of its segments relative to other
entities which operate in similar markets. Inter-segmental sales are made
using prices determined on an arm's length basis. Sector assets exclude cash,
short-term deposits and corporate assets that cannot reasonably be allocated
to operating segments. Sector liabilities exclude borrowings, retirement
benefit obligations and corporate liabilities that cannot reasonably be
allocated to operating segments.
The Group's principal products and services by division are disclosed in the
table below, together with information regarding performance obligations and
revenue recognition. Revenue is recognised by the Group as contractual
performance obligations to customers are completed.
Division Principal products and services Performance obligations Revenue recognition
Energy Products - Artificial lift special completion technology and software Point in time - On despatch or delivery, depending on contract terms.
- Customer acceptance of goods
Over time - Based on right of use/ right of access
Based on costs incurred or straight-line over licence term
Services - Blade repairs, high voltage cable laying well testing, hire of air Over time - Acceptance from customer
compressors, steam generators, heat suppression equipment (including
personnel) - Customer approved timesheets
- Time based monthly billing
- Stage of completion, input/output measure based on costs
incurred as a proportion of total costs/ achievement of KPIs or milestones.
- Acceptance from customer
Specialist subsea services, site preparation
asset management, offshore wind control room services, inspection, repair, and Point in time
maintenance services
Engineering and design solutions, production, installation, and commissioning
services, nanobubble oxygenation service, full project support for offshore
and subsea operations, decommissioning services
Defence Products - General diving equipment, spares, breathing machines, and subsea Point in time - On despatch or delivery, depending on contract terms
equipment for commercial and defence applications.
Services - Submarine rescue services (Ad hoc Tasks), Military diving equipment Point in time - Acceptance from customer
servicing (Taskings)
- Completion of test
Submarine Rescue Services, Military diving equipment servicing (Core - In
Service Support) Over time - Output basis/ achievement of Key performance indicators (KPI's)
Submarine Rescue Services (Training Exercises/ Mid Life Refits)
Over time - Stage of completion, input measure based on costs incurred as a
proportion of total expected costs
Construction contracts - Dive support vessels, submarine platform equipment, Over time - Stage of completion, input measure based on costs incurred as a
components and assemblies, tactical diving vehicles and carrier seals proportion of total costs.
(subsea/surface craft) and recompression chambers
Maritime Transport Products - Fenders, safety, and monitoring equipment Point in time - On despatch or delivery, depending on contract terms
Services - Transport, storage of chemicals and petroleum, ship to ship Over time - Stage of completion output measure based on specific milestones in
transfer and port services process.
- Vessel tendering notice of readiness to enter the port
Year ended 31 December 2023 Energy Defence Maritime Transport Continuing Discontinued Total
£m £m £m total total £m
£m £m
Revenue recognised at a point in time 195.4 52.4 35.3 283.1 1.1 284.3
Revenue recognised over time 71.1 20.1 121.9 213.1 5.6 218.6
Revenue 266.5 72.5 157.2 496.2 6.7 502.9
Year ended 31 December 2022 Energy Defence Maritime Transport Continuing Discontinued Total
£m £m £m total total £m
£m £m
Revenue recognised at a point in time 168.4 52.1 33.4 253.9 4.1 258.0
Revenue recognised over time 74.2 16.1 133.9 224.2 38.7 262.9
Revenue 242.6 68.2 167.3 478.1 42.8 520.9
Year ended 31 December 2023 Products Services Construction contracts Continuing Discontinued Total
£m £m £m total total £m
£m £m
Energy 53.5 201.9 11.1 266.5 6.7 273.2
Defence 20.9 47.7 3.9 72.5 - 72.5
Maritime Transport 35.3 121.9 - 157.2 - 157.2
Revenue 109.7 371.5 15.0 496.2 6.7 502.9
Year ended 31 December 2022 Products Services Construction contracts Continuing Discontinued Total
£m £m £m total total £m
£m £m
Energy 51.0 180.2 11.4 242.6 42.8 285.4
Defence 17.2 47.8 3.2 68.2 - 68.2
Maritime Transport 33.4 133.9 - 167.3 - 167.3
Revenue 101.6 361.9 14.6 478.1 42.8 520.9
Included in services revenue, is revenue from operating lease rental income of
£7.9m (2022: £10.3m) which is accounted for under IFRS 16: Leases. Property,
plant and equipment which is used to generate operating lease rental income is
detailed in Note 14. The nature of the leasing activities in the period are
various short-term equipment leases in Energy and Maritime Transport
Divisions.
Within the Energy Division, there are specific maintenance contracts which
include variable consideration related to performance-based achievements over
a number of years. Reflecting on the contract terms, the susceptibility of
factors outside of the entity's control that would impact the consideration
and the limited experience history management has on these specific
maintenance contracts, management have concluded that the variable
consideration should be constrained. On this basis £nil of the £5.0m
variable consideration within these contracts has been recognised in the
period, otherwise there is a risk of subsequent reversal when the uncertainty
is subsequently resolved.
Year ended 31 December 2023 Energy Defence Maritime Transport Corporate Continuing Discontinued Total
£m £m £m £m total total £m
£m £m
Segmental revenue 266.5 72.6 157.2 - 496.3 6.8 503.1
Inter-segmental sales - (0.1) - - (0.1) (0.1) (0.2)
Revenue 266.5 72.5 157.2 - 496.2 6.7 502.9
Underlying operating profit/(loss) 15.7 1.5 23.3 (10.9) 29.6 (11.4) 18.2
APMs (see Note 2) (6.2) (25.2) (1.6) (15.2) (48.2) - (48.2)
Operating profit/(loss) 9.5 (23.7) 21.7 (26.1) (18.6) (11.4) (30.0)
Finance income 3.2 - 3.2
Finance expense (24.5) - (24.5)
Loss before tax (39.9) (11.4) (51.3)
Income tax (11.0) - (11.0)
Loss for the year (50.9) (11.4) (62.3)
Assets and liabilities
Segmental assets 226.8 80.0 154.5 88.5 549.8 - 549.8
Investment in joint ventures 2.6 3.3 2.5 - 8.4 - 8.4
Total assets 229.4 83.3 157.0 88.5 558.2 - 552.2
Segmental liabilities (72.8) (31.7) (73.2) (231.9) (409.6) - (409.6)
156.6 51.6 83.8 (143.4) 148.6 - 148.6
Other segmental information
Capital expenditure* 28.7 6.3 27.9 0.1 63.0 - 63.0
Depreciation and amortisation 17.4 4.2 19.3 0.4 41.3 - 41.3
* Capital expenditure relates to additions within other intangible assets,
property, plant and equipment and right of use assets.
At 31 December 2023, there is £3.6m (2022: £6.1m) consideration allocated to
performance obligations that were unsatisfied and expected to be recognised as
revenue within 12 months.
Revenue from discontinued activities disclosed in the income statement is
comprised of products £0.6m (2022: £4.1m) services of £3.7m (2022: £23.6m)
and construction contract income of £2.3m (2022: £15.0m).
For details of the amount of impairment losses and reversals of impairment
losses recognised in profit or loss during the period, see Note 2.1.
The following table shows the maturity profile of operating lease receivables
using the undiscounted payments:
Within 1 1 - 2 2 - 3 3 - 4 4 - 5 >5
year years years years years years
£m £m £m £m £m £m
Operating lease receivables 8.1 0.9 0.9 - - -
Year ended 31 December 2022 Energy Defence Maritime Transport Corporate Continuing Discontinued Total
£m £m £m £m total total £m
£m £m
Segmental revenue 242.8 68.3 167.3 - 478.4 43.9 522.3
Inter-segmental sales (0.2) (0.1) - - (0.3) (1.1) (1.4)
Revenue 242.6 68.2 167.3 - 478.1 42.8 520.9
Underlying operating profit/(loss) 13.9 (0.4) 18.8 (5.9) 26.4 (7.3) 19.1
APMs (see Note 2) 2.5 (3.1) 0.4 (1.5) (1.7) (13.3) (15.0)
Operating profit/(loss) 16.4 (3.5) 19.2 (7.4) 24.7 (20.6) 4.1
Finance income 0.7 - 0.7
Finance expense (10.9) - (10.9)
Profit/(loss) before tax 14.5 (20.6) (6.1)
Income tax (5.5) 0.8 (4.7)
Profit/(loss) for the year 9.0 (19.8) (10.8)
Assets and liabilities
Segmental assets 250.8 114.5 155.1 63.6 584.0 16.3 600.3
Investment in joint ventures 3.0 3.4 2.3 - 8.7 - 8.7
Total assets 253.8 117.9 157.4 63.6 592.7 16.3 609.0
Segmental liabilities (81.5) (33.0) (74.6) (185.3) (374.4) (16.3) (390.7)
172.3 84.9 82.8 (121.7) 218.3 - 218.3
Other segmental information
Capital expenditure* 16.7 5.4 31.2 0.2 53.5 0.4 53.9
Depreciation and amortisation 19.5 5.3 15.1 0.4 40.3 0.8 41.1
* Capital expenditure relates to additions within other intangible assets,
property, plant and equipment and right of use assets.
Geographic information
Geographical revenue is determined by the location in which the product or
service is provided. Where customers receive the product or service in one
geographical location for use or shipment to another it is not practicable for
the Group to identify this, and the revenue is attributed to the location of
the initial shipment. The geographical allocation of segmental assets and
liabilities is determined by the location of the attributable business unit.
United Kingdom Rest of Europe Middle East, Africa & Americas Asia Pacific Total
2023 2022 2023 2022 2023 2022 2023 2022 2023 2022
£m £m £m £m £m £m £m £m £m £m
Continuing
Revenue
Segmental revenue 157.6 165.1 66.1 65.3 180.1 155.5 92.5 92.5 496.3 478.4
Inter-segmental sales (0.1) (0.3) - - - - - - (0.1) (0.3)
Group revenue 157.5 164.8 66.1 65.3 180.1 155.5 92.5 92.5 496.2 478.1
Discontinued
Revenue
Segmental revenue 6.8 43.6 - - - - - 0.3 6.8 43.9
Inter-segmental sales (0.1) (1.1) - - - - - - (0.1) (1.1)
Group revenue 6.7 42.5 - - - - - 0.3 6.7 42.8
Continuing
Segmental non-current assets 203.2 209.9 38.7 40.9 26.3 26.8 18.7 34.9 286.9 312.5
Segmental current assets 191.5 177.0 8.8 7.1 37.0 53.2 25.6 34.2 263.9 271.5
Segmental assets 395.7 386.9 47.5 48.0 63.3 80.0 44.3 69.1 549.8 584.0
Investment in joint ventures 1.0 0.3 2.5 3.1 1.2 0.2 3.7 5.1 8.4 8.7
Segmental liabilities (350.9) (314.1) (14.3) (8.0) (31.5) (36.1) (12.9) (16.2) (409.6) (374.4)
44.8 73.1 35.7 43.0 33.0 44.1 35.1 58.0 148.6 218.3
Discontinued
Segmental non-current assets - - - - - - - - - -
Segmental current assets - 16.3 - - - - - - - 16.3
Segmental assets - 16.3 - - - - - - - 16.3
Investment in joint ventures - - - - - - - - - -
Segmental liabilities - (16.3) - - - - - - - (16.3)
- - - - - - - - - -
Major customer - No single customer generates revenue greater than 10% of the
consolidated revenue.
4. Discontinued operations
In December 2022, management agreed a plan to sell the nuclear business as a
result of a strategic decision to rationalise and focus the portfolio of
businesses within the Group. At 31 December 2022, the business had been
classified as held for sale and is part of a single co-ordinated plan to
dispose of a separate major line of business. It had been classified as a
discontinued operation.
On 6 March 2023, the Group announced that the entire share capital of James
Fisher Nuclear Holdings Limited and related properties was sold to Myneration
Limited, a wholly-owned investment vehicle of Rcapital Partners LLP for a
consideration of £3. The Group has retained certain parent company guarantees
which historically were given to support the obligations of JFN.
Results of discontinued operations 2023 2022
£m £m
Revenue 6.8 43.9
Inter-segmental sales (0.1) (1.1)
6.7 42.8
Expenses (17.1) (50.1)
Loss before taxation (10.4) (7.3)
Income tax (1.0) 0.8
Loss from operating activities after tax (11.4) (6.5)
Loss on remeasurement to fair value less costs to sell - (13.3)
Loss for the year from discontinued operations (11.4) (19.8)
Attributable to:
Owners of the Company (11.4) (19.8)
Non-controlling interests - -
(11.4) (19.8)
Cash flows used in discontinued operations 2023 2022
£m £m
Net cash from operating activities (0.4) (3.1)
Net cash from investing activities - (5.0)
Net cash from financing activities - -
Net cash flows for the year (0.4) (8.1)
At 31 December 2022, the disposal group was stated at fair value less costs to
sell and comprised the following assets and liabilities:
2022
£m
Property, plant and equipment 2.3
Inventories 0.7
Trade and other receivables 10.5
Cash and cash equivalents 2.8
Assets held for sale 16.3
Trade and other payables (13.8)
Lease liabilities (2.2)
Taxation (0.3)
Liabilities associated with assets held for sale (16.3)
On transfer of assets to held for sale a £13.3m loss was recognised in 2022
on remeasurement to fair value less cost to sell, consisting of impairments of
goodwill (£8.1m), property, plant and equipment (£3.9m) and anticipated
costs of disposal (£1.3m).
The non-recurring fair value measurement for the disposal group before £1.3m
costs to sell had been categorised as a Level 3 fair value based on the
present value of cash flows.
5. Taxation
(a) The tax charge is based on profit for the year and comprises:
2023 2022
£m £m
Current tax:
UK corporation tax (0.1) (1.2)
Overseas tax (9.0) (6.3)
Adjustment in respect of prior years:
UK corporation tax - 0.5
Overseas tax 0.1 0.2
Total current tax (9.0) (6.8)
Deferred tax:
Origination and reversal of temporary differences:
Current year
UK corporation tax - current year 1.9 0.7
UK - write off of brought forward deferred tax asset (4.7) -
Overseas tax 1.0 (0.3)
Prior year
UK corporation tax (0.3) 0.9
Overseas tax 0.1 -
Tax expense on continuing operations (11.0) (5.5)
The tax expense excludes a tax charge from discontinued operations of £1.0m
(2022: credit £0.8m).
The total tax charge in the income statement includes a further £0.2m (2022:
£0.1m) which is stated within the share of post-tax results of joint
ventures.
6. Earnings per share
Basic earnings per share is calculated by dividing the profit attributable to
shareholders by the weighted average number of ordinary shares in issue during
the year, after excluding 12,519 (2022: 47,855) ordinary shares held by the
James Fisher and Sons plc Employee Share Ownership Trust (ESOT), as treasury
shares. Diluted earnings per share are calculated by dividing the net profit
attributable to shareholders by the weighted average number of ordinary shares
that would be issued on conversion of all the dilutive potential ordinary
shares into ordinary shares.
At 31 December 2023, 2,649,876 options (2022: 1,759,740) were excluded from
the diluted weighted average number of ordinary shares calculation as their
effect would be anti-dilutive. The average market value of the Company's
shares for purposes of calculating the dilutive effect of share options was
based on quoted market prices for the period during which the options were
outstanding.
The calculation of the basic and diluted earnings per share is based on the
following data:
2023 2022
£m £m
Loss after tax attributable to shareholders (62.4) (11.1)
Weighted average number of shares
2023 2022
Number of Number of
shares shares
Basic weighted average number of shares 50,358,388 50,345,989
Potential exercise of share-based payment schemes - 21,158
Diluted weighted average number of shares 50,358,388 50,367,147
Earnings per share pence pence
Basic earnings per share (123.9) (22.1)
Diluted earnings per share (123.9) (22.1)
Earnings per share - continuing operations pence pence
Basic earnings per share (101.2) 17.4
Diluted earnings per share (101.2) 17.4
Earnings per share - discontinued operations pence pence
Basic earnings per share (22.7) (39.5)
Diluted earnings per share (22.7) (39.5)
7. Dividends paid and proposed
There were no dividends paid or proposed in either 2023 or 2022.
8. Assets and liabilities held for sale
At 31 December 2023, £12.3m assets and £0.7m liabilities relate to a
non-core business which has been classified as held for sale.
At 31 December 2023, a vessel with net book value £0.6m in the Maritime
Transport division has been classified as held for sale.
At 31 December 2023, £1.1m of property in the Energy Division has been
classified as held for sale.
At 31 December 2023, a vessel with net book value of £0.7m in the Energy
Division has been classified as held for sale.
The vessel in the Maritime Transport division completed during January and the
remaining disposals are expected to complete during 2024.
In June 2021, Management agreed a plan to sell the Dive Support Vessel (DSV)
known as the Swordfish within the Energy Division. During January 2023, the
vessel was sold for £18.4m being proceeds less selling costs. A gain of
£0.3m is included within administrative expenses. During 2022, a £5.4m
reversal of impairment loss has been recorded in cost of sales.
At 31 December 2022, £16.3m assets and £16.3m liabilities relates to the
nuclear business, which was classified as a discontinued operation.
In the prior year £1.5m of assets related to land and buildings for a
business within the Defence Division.
9. Retirement benefit obligations
The Group and Company defined benefit pension scheme obligations relate to the
James Fisher and Sons plc Pension Fund for Shore Staff (Shore staff), the
Merchant Navy Officers Pension Fund (MNOPF) and the Merchant Navy Ratings
Pension Fund (MNRPF) which are regulated under UK pension legislation. The
financial statements incorporate the latest full actuarial valuations of the
schemes which have been updated to 31 December 2023 by qualified actuaries
using assumptions set out in the table below. These defined benefit schemes
expose the Company to actuarial risks, such as longevity risk, currency risk,
interest rate risk and market (investment) risk. In addition, by participating
in certain multi-employer industry schemes, the Company can be exposed to a
pro rata share of the credit risk of other participating employers. There are
no plans to withdraw from the MNOPF or MNRPF schemes in the foreseeable
future. The Group's obligations in respect of its pension schemes at 31
December 2023 were as follows:
Group Company
2023 2022 2023 2022
£m £m £m £m
Shore staff 7.4 5.5 7.4 5.5
MNOPF - (0.4) - (0.2)
MNRPF (1.6) - (0.5) -
5.8 5.1 6.9 5.3
10. Reconciliation of net borrowings
Net debt comprises interest bearing loans and borrowings less cash and cash
equivalents.
31 December Cash Other Transfers Exchange 31 December
2022 flow non-cash* £m movement 2023
£m £m £m £m £m
Cash and cash equivalents 22.8 5.7 - (0.4) (1.7) 26.4
Cash - classified within assets held for sale 2.8 - - (2.4) - 0.4
Debt due within one year (36.6) 36.6 - - - -
Debt due after one year (121.9) (43.0) (1.8) - - (166.7)
(158.5) (6.4) (1.8) - - (166.7)
Lease liabilities (52.9) 18.1 (28.9) - 2.5 (61.2)
Net borrowings (185.8) 17.4 (30.7) (2.8) 0.8 (201.1)
31 December Cash Other Transfers Exchange 31 December
2021 flow non-cash** £m movement 2022
£m £m £m £m £m
Cash and cash equivalents* 34.5 (11.4) - (2.8) 2.5 22.8
Cash - classified within assets held for sale - - - 2.8 - 2.8
Debt due within one year (0.1) - - (36.5) - (36.6)
Debt due after one year (174.0) 16.6 (1.0) 36.5 - (121.9)
(174.1) 16.6 (1.0) - - (158.5)
Lease liabilities (46.0) 14.5 (17.8) - (3.6) (52.9)
Net borrowings (185.6) 19.7 (18.8) - (1.1) (185.8)
* Other non-cash includes lease additions and finance expense related
to the unwind of discount on right-of-use lease liability.
Transfers comprise £0.4m and (£2.8m) of cash and cash equivalents which
relate to a business classified as held for sale and the disposal of a
business classified as discontinued operations in the prior year.
11. Share capital
Allotted, called up and fully paid
25p Ordinary shares £1 Cumulative
Preference shares
In millions of shares 2023 2022 2023 2022
In issue at 1 January and at 31 December 50.4 50.4 0.1 0.1
2023 2022 2023 2022
£m £m £m £m
Issued share capital 12.6 12.6 0.1 0.1
The preference shareholders are entitled to receive 3.5% cumulatively per
annum, payable in priority to any dividend on the ordinary shares. The
ordinary shareholders are entitled to receive dividends as declared from time
to time by the Directors.
Shares all carry equal voting rights of one vote per share held. They also
have the right to attend and speak at general meetings, exercise voting rights
and appoint proxies. Neither type of share is redeemable. In the event of a
winding-up order the amount receivable in respect of the cumulative preference
shares is limited to their nominal value. The ordinary shareholders are
entitled to an unlimited share of the surplus after distribution to the
cumulative preference shareholders.
Treasury shares 2023 2022
£m £m
12,519 (2022: 47,855) ordinary shares of 25p 0.5 0.6
The Company has an established Employee Share Ownership Trust, the James
Fisher and Sons plc Employee Share Ownership Trust, to meet potential
obligations under share option and long-term incentive schemes awarded to
employees. The historic cost of these shares at 31 December 2023 was £0.5m
(2022: £0.6m). The trust has not waived its right to receive dividends.
In the year ended 31 December 2023, 35,337 ordinary shares with an aggregate
nominal value of £8,834 were issued to satisfy awards made under the
restricted share award made to Mr Vernet (CEO). No shares were issued during
the prior year.
The Trust purchased no shares during 2023 or 2022.
12. Related party transactions
Excepting the change of Directors, there were no material changes to related
parties or associated transactions from those disclosed in the 2022 Annual
Report.
13. Post balance sheet events
On 22 March 2024, the Group agreed to sell its RMSpumptools business to
ChampionX UK Limited, a wholly owned subsidiary of ChampionX Corporation.
RMSpumptools did not meet the highly probable criteria to be recognised as a
held for sale business as at 31 December 2023, primarily due to uncertainty
associated with the disposal plan.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR FIFSSSVIRLISRecent news on James Fisher And Sons
See all newsREG - Fisher (James) - Annual Report and Accounts 2023 and Notice of AGM
AnnouncementREG - Fisher (James) - Preliminary results for the year ended 31 Dec 2023
AnnouncementREG - Fisher (James) - Proposed disposal of RMSpumptools business
AnnouncementREG - Fisher (James) - Holding(s) in Company
AnnouncementREG - Fisher (James) - Holding(s) in Company
Announcement